General Partners of a Limited Partnership and GST/HST

Are the General Partners of a Limited Partnership Required to Collect GST/HST on Payments or Distributions Received from Their Partnerships?

On September 8, 2017, the Minister of Finance presented new legislative proposals regarding limited partnerships. Under these new measures, certain distributions made by limited partnerships to general partners will henceforth be subject to the GST/HST.

Partnerships are covered by specific rules prescribed by the Excise Tax Act. The practical effect of these rules is that services provided by a partner to its partnership in his/her capacity as partner are not considered as being provided by the partner but rather by the partnership in connection with its activities.  The partner would therefore not be considered as having provided a service and would not have to collect any GST/HST in this regard.

In order to apply these rules, the critical question is to determine whether or not a service is rendered “as a partner of the partnership”. The answer to this question needs to be determined based on particular facts, such as the partnership agreement, the nature of the services rendered and their relation to the partnership’s activities and the partner’s normal activities and remuneration, as applicable.

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To see the webinar on estate planning (in French), click here.

You can also download the document here.

It’s a well-known saying that only two things in life are certain, death and taxes. Estate planning is important to ensure that your wishes are carried out and to minimize the overall tax burden on your estate when you die.

Our tax experts will go over various matters to consider so that your heirs can benefit from your estate in the best possible tax conditions while ensuring sound overall wealth management.

They will provide the answers to many questions, including:

  • What happens if I die without a will?
  • Who pays the taxes after I die?
  • Do I have enough life insurance to cover my family’s financial needs?
  • Will my heirs have to deal with my business partners?

This French webinar is offered at no charge by Raymond Chabot Grant Thornton. Participants may ask questions online.

France Vézina


Danielle Loranger

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The Québec government announced a number of tax measures geared towards innovative corporations in its last budget. These new measures are added to those already in place (SR&ED tax credits, First Patent program) to foster research and development (R&D) in Québec, but also the commercialization of the resulting inventions.

Deduction for qualified innovative manufacturing corporations

The deduction for qualified innovative manufacturing corporations (or “DIMC”) is particularly intended for corporations in the manufacturing and processing sector that cannot claim the small business deduction. The purpose of the DIMC is to encourage a qualified innovative manufacturing corporation to profit in Québec from a patent it has been granted as the result of scientific research and experimental development (R&D) work that it carried out in Québec. The DIMC will enable such a corporation to reduce its taxable income for a taxation year by an amount equal to a portion of the value of a qualified patented part integrated into qualified property that the corporation sold.

Fiscal legislation has been amended so that a qualified innovative manufacturing corporation can deduct, in calculating its taxable income for a taxation year, a specified annual percentage of the lesser of:

  • the total value of all qualified patented parts incorporated into qualified property that the corporation sold;
  • the DIMC ceiling, which is equivalent to 50% of net income earned on the sale or lease of qualified property shown in the separate accounts of the particular company.

Qualified patented part

The term qualified patented part, for a particular taxation year, refers to an invention for which the corporation owns or co-owns a patent under the Patent Act or any other legislation of a jurisdiction other than Canada having the same effect.

The Couillard government is hoping to foster investment in the innovative manufacturing sector, to maintain intellectual property in the province and to make Québec businesses more competitive. It also wants to encourage the production and commercialization of goods resulting from patents on Québec inventions. Finally, the government wants to encourage innovative companies to bring Québec to the forefront for high added-value manufacturing and R&D activities.

However, unfortunately the companies targeted for this measure are those mainly carrying on manufacturing and processing activities in Québec and operating a business with at least $15 million in paid-up capital.

However, unfortunately the companies targeted for this measure are those mainly carrying on manufacturing and processing activities in Québec and operating a business with at least $15 million in paid-up capital.

Given the complexity of this tax incentive, it is a good idea to talk to a patent officer and to one of our tax professionals in order to put in place measures allowing for the preparation and filing of R&D patent applications and making it possible to determine income from this intellectual property to claim the deduction.

Please come and talk to us about this!

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Maximilien Larivière
Advisor | ing. jr, M. Ing. | Tax

Given the issues surrounding climate change and the desire to reduce fossil fuel consumption, energy production is becoming an increasingly important issue that requires constant technological advances in order to meet demand.

However, there is no point in producing power that cannot be used. This is where the problem lies for intermittent energy sources, such as wind and solar power: how can it be ensured that energy production and consumption are in synch.

There are many different types of energy storage systems, such as batteries, hydrolysis (hydrogen storage), etc. However, all of these systems have major drawbacks that prevent their large-scale use. Sigma Energy Storage has developed a compressed air energy storage system, which includes recovery of thermal energy, in order to address the problem of how to store energy efficiently.

Energy storage systems: Sigma Energy Storage and HT-CAES technology

We interviewed Martin Larocque, the CEO of Sigma Energy Storage, to learn more about the company’s new HT-CAES technology, which is expected to revolutionize energy storage in the coming years.

QUESTION: What are the fundamental principles underlying your company’s energy storage technology?

ANSWER: The technology is based on the principles for mechanical energy (air compression) and thermal energy (heat recovery). One of the great complexities of compressed air energy storage systems relates to the air compression process, which generates a significant amount of heat. We developed a highly efficient thermal energy transfer system to capitalize on this phenomenon, which allows us to store the heat (potential energy) created during compression and to reinject it into our process when producing energy for the power grid. By combining thermal and mechanical energy, we have a major competitive advantage, allowing us to build a more efficient, higher pressure system (providing benefits in terms of storage density).

QUESTION: What are the advantages of your system as compared to other energy storage systems currently available on the market?

ANWER: The way in which we manage thermal energy is unique and gives us a competitive edge over other air compression systems (CAES systems). Our competitive environment also includes various types of batteries (which store chemical energy) that stand out in terms of their useful life: a battery will last on average between 2,000 and 3,000 cycles while our HT-CAES system will last 40,000 cycles, for a Levelized Cost of Energy (LCOE) that is 5 to 10 times lower than for batteries currently available on the market. Our HT-CAES system also makes it possible to operate in harsh weather conditions, such as seen in the Canadian climate (including the Arctic). HT-CAES technology performs particularly well in these conditions.

QUESTION: What types of applications could be benefitted by your technology?

ANWER: Our procedure was developed with various applications in mind: a micro-network using very high capacity diesel generators or storage units in a large and complex power grid. Where micro-networks are concerned, our system uses air storage pressure vessels. This requires no particular geological features, while allowing for the benefits of our HT-CAES solution on a smaller scale (from 500 kW to several MW). For a larger power grid, we use geological cavities (salt or rock seals) to have a very large air reservoir. In such situations, it becomes possible to integrate a large quantity of intermittent renewable energy (solar, wind and tidal energy) and to stabilize the power grid by making it possible to store energy as it is produced and distribute it on the power grid as it is required.

QUESTION: What are the main technological hurdles that must still be overcome before your system can be introduced into the market?

ANSWER: From a development standpoint, the design work for the HT-CAES procedure has been completed. As for the immediate future, we are optimizing each of the related sub-systems to improve Round Trip Efficiency. In addition, we are working on a number of other innovation streams, such as CO2capture, liquefaction and transformation, as well as the integration and recovery of a exergy generated by external industrial processes. The future is bright for our technology, which makes it possible to stabilize power grids while integrating renewable energy.

QUESTION: What types of future or derivative applications do you see for your system?

ANSWER: We expect that each renewable energy infrastructure project will require an energy storage system, which generally represents one third of the power generated. In the short term, these are the applications that could benefit from our HT-CAES solution. In the medium term, our capacity to recapture and liquefy CO2 as part of our process, and to capture the thermal energy from an external process (i.e. exergy), will open up new industrial applications.

Exergy:  In given thermodynamic conditions, the maximum useful work which can be extracted from a system, i.e. the capacity of energy to do physical work.

27 Sep 2017  |  Written by :

Maximilien Larivière is an advisor at Raymond Chabot Grant Thornton. He is your expert in taxation...

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