I have a client who receives US tax from 1065 for investment in US partnership as limited partner. I am wondering if this is considered specified foreign property that should be reported in T1135. I called CRA. They seem not very sure about this. Can someone share their understanding and experiences. Thanks!
If a Canadian resident taxpayer holds an interest in a partnership that is not a specified Canadian entity, a taxpayer is required to report their interest in the partnership on Form T1135 if the partnership holds specified foreign property. The taxpayer should provide the details of their partnership interest in category 6, “Other property outside Canada.”
One might assume that a US partnership probably holds specified foreign property (as defined in subsection 233.3(1)) and that limited partner is likely not carrying on an active business. I would think if the total cost of the client’s foreign property (including the foreign partnership interest) is over $100k Cdn they would be required to report the interest on the T1135.
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