Partnerships

A partnership is not a taxpayer in its 
own right. The tax liability in respect 
of the business of the partnership 
is imposed on its partners except in 
the case of specified investment 
flow-through entities (SIFTs), which 
are taxed on their earnings from 
non-portfolio property. (The SIFT 
legislation is discussed in 

Structuring 

Mining Investments – Partnerships 
and Joint Ventures – Income Tax 
Consequences – SIFT Legislation

.)

Partnership Information Returns

The partners of a partnership that carries 
on business in Canada are required to 
file a federal information return, and may 
be required to file a Québec information 
return, that reports the income or loss 
of the partnership and the allocation of 
such amount to each of the partners. 
The applicable information return can be 
filed by one partner on behalf of all of 
the partners. 

Federal Requirements

The Regulations prescribe that a federal 
information return be filed: 

• within five months after the end of 

the fiscal period for a partnership 
all of the members of which 
were corporations throughout the 
fiscal period;

• on or before the last day of March 

in the calendar year immediately 
following the calendar year in 
which the fiscal period ended for a 
partnership all of the members of 
which are were individuals (including 
trusts) throughout the fiscal period; or

• in any other case, on or before the 

earlier of:

– the day that is five months after 

the end of the partnership’s fiscal 
period and

– the last day of March in the 

calendar year immediately 
following the calendar year in 
which the partnership’s fiscal 
period ended.

Where a partnership discontinues 
its business or activity, the federal 
information return in respect of any 
fiscal period prior to the discontinuance 
of the business or activity must be filed 
on or before the earlier of:

• the day that is 90 days after the 

discontinuance of the business or 
activity, and

• the day the return is required to be 

filed under the preceding paragraph.

The Canada Revenue Agency has 
tailored these rules on an administrative 
basis, such that:

• professional corporations are 

excluded from the rule that governs 
partnerships all of the members of 
which are corporations and, instead, 
fall into the rule that applies for a 
partnership all of the members of 
which were individuals throughout 
the fiscal period; and

• partnerships that are tax shelters 

fall into the same rule that governs 
partnerships all of the members of 
which were individuals throughout 
the fiscal period.

On an administrative basis, a partnership 
does not need to file a federal 
information return unless:

• at the end of the fiscal period, the 

partnership has a combined absolute 
value of revenues and expenses of 
more than $2 million, or has more 
than $5 million in assets; or

• the partnership has a partnership as 

a partner or is a member of another 
partnership, has a corporation or 
trust as a partner, or invested in 
flow-through shares. 

However, the CRA has reserved the 
right to request that a partnership file 
a federal information return in other 
circumstances.
Each person who holds an interest in a 
partnership as a nominee or agent for 
another person must complete and file 
a separate federal information return for 
each partnership in which an interest is 
held for another person.

Québec Requirements

The partners of a partnership will also 
be required to file a Québec information 
return if:

• the partnership carries on business 

in Québec; or 

• the partnership either carries on 

business in Canada outside Québec 
or is a Canadian partnership and the 
partnership has at least one member 
that is:
– an individual (including a trust) that 

is resident in Québec, or 

– a corporation that has an 

establishment in Québec; 

• the partnership derives property 

income from a specified immovable 
(situated in Québec) that it owns, and 
has a specified trust as a member.

According to the Québec Regulations 
Respecting the Taxation Act (the 
“Québec Regulations”), a Québec 
information return can be filed by one 
partner on behalf of all of the other 
partners provided that the filing member 
is designated for the purpose of filing 
the information return. 
The Québec Regulations prescribe 
that the Québec information return be 
attached to and filed with the fiscal 
return that the person or member files 
for that year (or for the person’s or the 
member’s taxation year during which the 
partnership’s fiscal period ends). 

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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 A Guide to Canadian Mining Taxation