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If you held a partnership interest on behalf of someone else in 2011, you are likely required to file a separate partnership return for 2011, and the deadline to do it may be right around the corner…
On January 1, 2011, new filing criteria were introduced that apply to partnerships (and nominee/agents for partnerships) with fiscal periods ending after 2010. Primarily, administrative criteria that exempted certain partnerships from filing was updated from a test based on the number of partners to a requirement based on financial thresholds – one based on assets and the other based on revenue and expense activity.
In addition nominee/agents (referred to as “nominee” from here on) holding an interest in a partnership (referred to as “main partnership”) for another person is now required to complete and file a separate Partnership Information Return.
Assuming a nominee has not disclosed information about the investor(s) represented by the investment, the main partnership may be unaware of the investors and will not have enough information to issue the required slips. Therefore, it will generally issue a composite T5013 slip to the nominee only. In the past the nominee likely circulated a copy of this slip to the investors so they could pick up their relative share. This is no longer sufficient disclosure for CRA.
Nominees are now required to register and file a separate partnership information return for each composite T5013 slip, disclosing investor details that match the composite slip received from the main partnership. This will require that each nominee obtain a separate identification number (an RZ account) for each partnership in which there is an interest held for someone else. This creates new administrative requirements that weren’t there before. CRA has confirmed that the nominee requirements apply regardless of the size of the investment represented by the nominee.
Note that many partnership returns and nominee returns are due to be filed by March 31. We queried CRA on how nominees could meet their filing obligations if they may not receive the T5013 slip from the main partnership until or after their own filing deadline. CRA has indicated they understand that some nominees may have difficulty filing by the deadline, however, the nominee is still obligated to provide the information slips to the people they represent so they can meet their filing deadlines (April 30 for individuals). Furthermore, CRA has stated that the circumstances for late filed nominee forms will be considered prior to levying penalties as they understand this is a transition year. Late filed returns should be sent in with a note of explanation as to why it was filed late.
For more information, please contact your local MNP Tax advisor.
Related Topics:Canada Revenue Agency; Business Structures
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