2 June 2026 STEP Roundtable, Q.15

A foreign partnership holding foreign investment property (for example, foreign rental property) with Canadian-resident partners holding over 10% of the (proportionate) partnership interests, constitutes a “specified Canadian entity” as the total of all the non-resident partners' share of the partnership income or loss is less than 90% of the income or loss of the partnership during the period. Accordingly, it is required to file a T1135 return where the cost amount of its specified foreign property exceeds $100,000 in the year.

The Canadian partners are not required to file a T1135 if their only relevant property is their interest in the partnership, given that an interest in a partnership that is a specified Canadian entity is excluded from being specified foreign property pursuant to para. (o) of that definition.

A foreign partnership holding foreign investment property with a cost amount over $100,000 constituted a “specified Canadian entity” because its Canadian-resident partners held partnership interests entitling them to at least 10% of the income (or loss) of the partnership during the period, so that it was required to file T1135 returns.

The Canadian partners were not required to file a T1135 if their only relevant property was their interest in the partnership, given that an interest in a partnership that is a specified Canadian entity is excluded from being “specified foreign property” pursuant to para. (o) of that definition.