Canada Revenue Agency now treats U.S. LLPs and LLLPs as corporations

In public pronouncements culminating in its answer to a question posed at the 2016 International Fiscal Association Roundtable, the Canada Revenue Agency (CRA) has taken the position that Florida and Delaware limited liability partnerships (LLPs) and limited liability limited partnerships (LLLPs) will be treated by it as corporations for Canadian income tax purposes. As it is likely that the salient features of Florida and Delaware LLPs and LLLPs are comparable to those of similar partnerships in other U.S. states, this CRA position is expected to have a broad impact. While the merits of CRA's position can be debated, affected taxpayers must deal with the practicalities. In this context, the CRA has agreed to provide administrative relief for LLPs and LLLPs that convert to a form recognized by CRA as a partnership (a general partnership or a limited partnership) before 2018, provided certain other requirements are met as discussed below.