Do I file Form T5013 even if no tax is owed?
Annual return obligations of this kind are generally required on the facts rather than on the tax result, so a nil position does not remove one. Canadian partnerships above the filing requirements, and partnerships with non-resident partners or foreign operations.
What happens if I have missed Form T5013 for several years?
Missed years are dealt with as a package rather than one at a time, because the route chosen for the first year affects the relief available for the rest. We map the years and the obligations before anything is filed.
Is Form T5013 the same as the other reports I already file?
No. The partnership information return and partner slips, including the reporting of non-resident partners. Satisfying a different obligation, even one covering the same accounts or entity, does nothing for this one.
Does my partnership have to file a T5013 information return?
Filing turns on the partnership's size and circumstances rather than on whether it made money, and partnerships with non-resident partners or foreign operations are more likely to be caught than their scale alone suggests. The return reports the partnership's results and allocates them to the partners on slips, which the partners then use in their own returns. Because the obligation is tested on the partnership's own facts for the year, it can arise in one year and not the next. Check the position each year rather than assuming the previous year's answer still holds, particularly where partners have joined, left, or changed their country of residence.
The partnership pays no tax, so why file a return?
Because it determines everyone else's. A partnership is not taxed on its income; it computes that income and allocates it, and each partner then reports their share. The information return is where the computation and the allocation are made, so what ends up in a partner's Canadian or foreign return is decided here rather than there. That is also why an error in the partnership return is expensive to fix: it does not stay in one filing, it propagates into every partner's return in every country they file in. Getting the allocation and the character of the income right first time is the whole point of the exercise.
We have a non-resident partner, what changes for the partnership?
A non-resident partner brings questions the partnership has to answer rather than leave to the partner. Their share still has to be allocated and reported, and the partnership has to consider what its own income means for a partner taxed elsewhere, including whether amounts flowing to that partner attract withholding. The partner's home country treatment will in turn depend on how the partnership's income is characterised and sourced here, and those decisions are made in the partnership return. Deal with it when the partner is admitted rather than at year end, because admission is the point at which the reporting and withholding position can still be arranged deliberately.
How does the partnership allocation affect my personal return?
Your slip is not a summary of the partnership's year, it is the input to your return. The share allocated to you, and the character and source of the amounts making it up, carry through to how you are taxed on them. If you file in more than one country, the same allocation is being read by two tax systems that may treat the partnership itself differently, so the detail matters more than the total. Read the slip against the partnership agreement and against what you expected your share to be, and raise any discrepancy with the partnership before you file rather than afterwards.
Does source of income matter if the partnership operates abroad?
Yes, and it is usually the part that decides the cross-border outcome. Where income arises determines which country has the first claim on it and whether a partner can relieve the tax in the other, so two partnerships with identical profit can leave their partners in very different positions. The partnership return is where source is settled, and each partner then relies on it. Keep the working that supports the sourcing, meaning where the activity was carried on, where the assets sat and where the customers were, rather than only the conclusion. Partners in different countries will be asked to justify it in each of them.
What happens if the partnership information return goes in late?
Partnership filing obligations carry consequences of their own for lateness, and the practical problem is broader than the partnership. Partners cannot properly complete their own returns until the allocation is made, so one late information return holds up several personal or corporate filings, sometimes across more than one country. That is the cost usually felt first. If the return is going to be late, tell the partners early and give them the working figures you have so their own filings can proceed on a stated basis and be adjusted later. Then deal with the partnership's own position, rather than letting the delay run on unexplained.
Why are corporations double taxed?
Corporate double taxation happens because the company and its owners are separate taxpayers. The company pays tax on its profit; when the after-tax profit is distributed, the shareholder pays tax on the dividend. Canada softens this with the dividend gross-up and credit, which is meant to leave a shareholder roughly where they would have been earning the income directly. The United States taxes the C corporation and then the dividend, with no equivalent integration. See dividends to a foreign parent.
Can I set up a trust that works in two countries?
You can, but the two systems classify and tax trusts differently enough that a structure which is efficient in one is often a reporting problem in the other — a Canadian family trust with a US beneficiary, or a US revocable trust holding Canadian property, are the classic pairs. Canada's twenty-one-year deemed disposition, the US grantor rules and each country's reporting have to be read together, before drafting rather than after. See cross-border wills and trusts.
