Budget 2015 introduced changes for registered charities concerning their partnership holdings.
A registered charity can invest in limited partnerships and maintain its charitable status if it meets these conditions:
- the charity is a limited partner of the partnership;
- the charity—together with all non-arm’s length entities—holds 20% or less of the fair market value of all interests in the partnership; and
- the charity deals at arm’s length with each general partner of the partnership.
A registered charity with partnership holdings other than what is described above could be considered to be carrying on the business of the partnership. As a result, depending on the partnership’s activities and the specific arrangement, a registered charity may not meet the requirements for registration under the Income Tax Act.