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Proposed changes to GST/HST rules for limited partnerships

Heath Moore Heath Moore

Department of Finance released draft legislation which could cause distributions from certain limited partnerships to general partners to now be subject to GST/HST.

The consultation period for these proposals closed on October 10, 2017 and no further announcements have been made by the Department of Finance regarding these proposals. The proposals clarify that, where a general partner (GP) provides management or administrative services (including an asset management service) to an investment limited partnership1 (ILP), these services will be deemed to be other than in the course of the ILP’s activities and, therefore, such services will generally be subject to GST/HST on their fair market value. This could result in an additional cost to the ILP as most ILPs would not be able to recover the tax. In addition, the GP may need to register to report and remit GST/HST.

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