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.