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Limited partnership holdings

The 2015 Federal Budget proposed that a registered charity may invest in limited partnerships without being considered to be carrying on a business solely because of that holding, as long as it meets all of the following conditions:

• The charity must be a limited partner of the partnership
• The charity – together with all non-arm’s length entities – holds 20% or less of the fair market value of all interests in the partnership
• The charity deals at arm’s length with each general partner of the partnership

A registered charity with partnership holdings other than what is described above would be considered to be carrying on the business of the partnership. Depending on the nature of the partnership’s activities and the arrangement, this could result in the registered charity not meeting the requirements for registration under the Income Tax Act.

New reporting requirement

All registered charities must now annually report their partnership holdings. To fulfil the reporting requirement for this year, charities must answer the question below and attach it to the charity’s Form T3010, Registered Charity Information Return. Next year, this question will be included on Form T3010.

Response instructions

If the charity has direct partnership holdings either as a limited partner or a general partner, tick Yes.

If the charity does not have partnership holdings, or if all such holdings are indirect, tick No.

The following are examples of when a charity does not have to report holdings either as a limited partner or a general partner:

• It has holdings in mutual fund trusts, mutual fund corporations, or unit trusts which in turn have partnership holdings;
• It has entered into formal or informal arrangements with other parties which do not result in partnership holdings (for example, joint venture, or agency agreement).

Need more help?

For more information on charities and partnerships, read the questions and answers at Investments by registered charities in limited partnerships.

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