May 12, 2011

What return must be filed?

The return is a T5013 partnership information return (a "T5013 Return").

Who must file?

The new requirement applies to a "Canadian partnership" (as defined) or a partnership that carries on business in Canada, for each fiscal period of the partnership:

• If, at the end of the fiscal period, the partnership has an absolute value of revenues plus absolute value of expenses of more than $2 million or more than $5 million in assets; OR
• If, at any time in the fiscal period, the partnership is a tiered partnership, has a corporation or trust as a partner or has invested in certain flow-through shares, or the Minister of Revenue requests a return in writing.

A "Canadian partnership" is defined in the Income Tax Act (Canada) as a partnership with 100% Canadian resident partners (even if the partnership is formed under foreign law).

Thus, for example, a partnership formed under any law whose partners are all Canadian resident corporations will be subject to the new filing requirement.

When does the new filing requirement take effect?

The filing requirement applies to partnership fiscal periods ending after 2010.  

What has changed?

Before, the Canada Revenue Agency exempted certain partnerships with fewer than six members from filing a T5013 Return. 

What is the filing deadline?

The filing deadline depends on the partners of the partnership.  For example, in the case of partnerships with 100% corporate partners, the T5013 Return must be filed within five months after the end of the fiscal period (i.e. by May 31, 2012 in the case of a December 31, 2011 fiscal period).  A T5013 Return filed by any member of a partnership is deemed to have been filed by the other members of the partnership.

Why has the filing requirement been broadened?

The Canada Revenue Agency wants "to focus on the complexity and magnitude of partnership activities" and has stated that it is replacing its prior six-member threshold for filing with the new broader criteria because "over the last 20 years, the Canadian economy and business landscape have evolved, showing that business activity and assets held by a partnership, as well as the complexity of a partnership's structure, are more significant for tax matters than the number of partners."