Canadian Tax Highlights Multinational Service Firms, Part 2 The globalization of consulting and professional practices creates a host of legal and tax considerations. A joint venture arrangement shares expenses, including referral fees, but not all profits and losses. Each co-venturer claims depreciation and incurs losses and is liable for its own debts.
Partners share income and losses and are jointly and severally liable for partnership debts.
A partnership with an individual partner has a calendar year-end. A partnership may have individual, corporate, or partnership members. A foreign corporate partner in a partnership carrying on business in Canada is liable for income and branch taxes. A dividend from active business earnings of a Forco in a treaty jurisdiction is ordinary income to an individual partner. Revenue allows a US LLC to benefit from the Canada-US treaty only if it elects to be taxed as a corporation.