Canadian LP
Limited Partnership

Canadian Limited Partnership (LP)

A Limited Partnership (LP) in Canada is a business structure made up of:

General Partners (GPs): Manage the business and are fully liable for its debts.
Limited Partners (LPs): Contribute capital and share in the profits, but do not participate in management. Their liability is limited to their investment.

It is a legal relationship, not a separate legal entity like a corporation, and is governed by provincial or territorial laws.

Why set up an LP in Canada?

• Flexible Structure: Combines limited liability for investors with managerial control for general partners.
• No Corporate Tax (If Non-Resident & No Canadian Source Income): Canadian LPs are often tax-neutral vehicles.
• Attractive to Foreign Investors: Used frequently for investment funds, holding companies, and international tax planning.
• No Requirement for Canadian Residents: Foreigners can be both general and limited partners.
• Confidentiality: LPs are not subject to the same disclosure obligations as corporations.

Regulatory Requirements

Incorporation: Must incorporate with the provincial Official Incorporation Department (e.g., Alberta, British Columbia, Ontario, etc.).
Filing Requirements: Vary by province. Often include:

Partnership agreement (optional but highly recommended)
Registration forms
Annual renewals/updates

No requirement to file financial statements or annual returns (unlike corporations).
Name Restrictions: Must include “Limited Partnership” or “LP”.

Set up your LP in
Canada today!

Partners in a Canadian LP

General Partner (GP)

– Responsible for day-to-day operations.
– Has unlimited liability.
– Can be an individual or a corporation.
– Often structured as a corporation to limit personal liability.

Limited Partner (LP)

– Passive investor.
– Liability limited to their capital contribution.
– Cannot participate in management, or they risk losing limited liability protection.

Management of a Limited Partnership

• Managed exclusively by General Partners.
• Limited partners must not engage in active management.
• Decisions are governed by the Partnership Agreement.
• No board of directors or corporate governance required.

LP Corporate Taxation & Tax Exemptions

Flow-Through Taxation

• An LP itself is not taxed at the entity level.
• Profits or losses “flow through” to the partners, who report them in their own tax jurisdictions.

For Non-Residents:

• If the LP has no Canadian-source income, there may be no Canadian tax liability.
• If income is sourced in Canada, non-resident partners must:
• File Canadian tax returns.
• Pay tax on their share of Canadian-source income.

Important: Proper legal structuring and tax advice are essential to ensure tax neutrality and compliance.

Set up your LP in
Canada today!

Required Documents

• LP Incorporation form
• Name reservation (if applicable)
• Company address in Province
• Designation of general and limited partners
• Partnership agreement (recommended)Fee payment

Why Choose a Canadian LP?

• Tax-neutral structure for global business
• Minimal Regulations
• Ideal for Passive Investors
• Great for International Structuring
• No Canadian residency Requirement

Why LP is Ideal for Non-Resident Investors/Traders

No Residency Requirement:
You can form an LP in British Columbia or Alberta with non-resident individuals or foreign companies as partners.

Low Tax Burden:
If the LP has no Canadian-source income, then no Canadian taxes apply.
Non-resident partners only taxed in their own country (subject to tax treaties).

Flexible Ownership:
GP can be a non-resident corporation or another limited liability entity (to protect personal liability).
LPs can contribute capital and share profits without active management.

Anonymity:
In BC, only the GP is disclosed in public records, offering privacy to limited partners.

No Corporate Income Tax:
All income flows through to the partners.

Typical Use Cases for LPs by Non-Residents

Holding international assets or IP
Conducting e-commerce or drop-shipping
International trading
Crypto investment & DeFi ventures
Consulting or marketing services abroad
Real estate investments outside Canada

Example LP Setup for a Non-Resident:

Jurisdiction: British Columbia
General Partner: Belize LLC (fully liable, but has no assets)
Limited Partner: Non-resident individual (you)
Tax: 0% if no Canadian-source income
Annual Filing: Basic report to BC Registry