Registered charities and limited partnership holdings

Registered charities and limited partnership holdings

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.

All registered charities must report their partnership holdings as part of their annual information return. For more information, visit the CRA website here: New Reporting Requirement.

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.

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