Canada - LP/Other jurisdictions

Canada is a country with a comparatively strict system of taxation. Ordinary Canadian companies are liable to tax on all their worldwide income. Accordingly, they have no features attributable to tax-exempt or offshore structures.

As such, Canada has an image in the eyes of entrepreneurs and government bodies as a country with a standard system of taxation. Due to this, any structure established on Canadian territory is considered a highly prestigious vehicle.

However, Canadian legislation does offer the opportunity of registering and using Canadian enterprises with a zero rate of tax. These are known as L.P. companies. The L.P. is a limited partnership which has no less than two partners. One of the partners is a General Partner, whilst the other partners have the status of Limited Partners. In province of Alberta, registration and operation of Limited Partnerships is governed by Chapter 2 of Alberta Partnerships Act.

A Canadian L.P. with foreign members, which does not carry on a business in Canada and derives no income on Canadian territory, is not liable to tax in Canada. According to the Canadian tax laws, the L.P. is not considered as the separate subject of taxation. It is the founders ("Partners") who should pay taxes from the profits received by the L.P. company in the place of their residence, in proportions according to the shares of interests belonging to them in the L.P. company, if it is stipulated by the legislation of that particular country.