# Limited Partnership - non resident 0% Tax?



## hollistay (Jan 28, 2016)

Hi, I am think to form an Ontario LP, but I need an advice from experts related with the following situation:

Limited Partnerships in Ontario, non-Canadian residents.

- one-man limited partnership, when one person is a sole general and limited partner
- this person is non resident
- there isn't any presence in Canada (less than 14 days per year)
- there aren't office or employee in Canada. Only an address (forwarding service)
- Bank account in Canada
- Canadian Credit Card processor or Paypal. 

Type of Income:
Worldwide Online marketing and affiliation fee.
Web server abroad.
Indipendent contractors from India, Europe, etc. do the work. (website creation, translations, campaign management)

Payment (commission) from Canada Company around 30'000$ per year
This commission are payed from a big affiliate network based in canada (maxbounty) but are not strictly related with canadian products or customers. 
The canadian network pay us for performance related with worldwide sale of products and service non strictly related with canada:
Ex: an italian booking an hotel in china, we can receive a payment from a canadian network.

Payment from worldwide Company around 120'000$ per year.
This commission are payed from companies out of Canada as affiliation fee related with worldwide sell of products (99% unrelated with Canada) and service to worldwide customers (canadian buyers are less than 1%).
Ex: Uk person invest in forex service offered from a Cyprus Company. We receive payment from an Offshore related company of the Cyprus forex.

Under the (GST / HST / PST) rules over 30'000$ of income is required a registration.

1) We ask for (GST / HST / PST) from any canadian company and pay the related (GST / HST / PST).

2) Regarding the income tax, how we have to manage it, considering the LP as a disagregated entity (basically the single member).

A) Pay tax on 100% of Worldwide income of the LP.

B) Pay 0% income tax as reported here (https://www.apintertrust.com/incorp...ed_partnership_in_canada_for_nonresidents.htm). They are seller of formation service... 

C) Pay tax on income calculated as Canadian payers sales less cost to provide the services (directly related but not easy to demostrate to non expert person, as cost for advertising or part of cost for server mantainance). For example if we have 10 campaigns runs on google, google do 1 single invoice for month. We can see the part related with Canadian in our adwords panel, there isn't a clear evidence in an invoice. 

D) Pay tax on income calcultaed as total Canadian payers sales without any cost

- Pay tax on income calculted as total Canadian payelrs sales less total canadian received invoice (but this cost are unrelated with the service provided, like cost for a canadian accountant, registered agents, or other service like Voip phone lines), basically coerent with (GST / HST / PST).


*We have all the options from 0% taxable income to 100% where is the true?
Regarding the non-resident tax for this specifica case, tax rate is 30% flat or how we have to calculate it?*

I hope to receive some advice from Canadian Tax Experts.

In the United States, for a US LLC single member non resident without any presence, the answer under the common law is C but at the same time your risk for an audit from IRS is very high and cost you time and money. 
Split the income from various source is possible, but have to be reasonably accepted from tax authorities, and IRS officer are not reasonable person.
If we spend 10'000$ to realized a website (by indian contractors for example), and from this website we have 40'000$ income (affiliation service, banners, etc) from worldwide company and 10'000$ from canadian payers, under a reasonable point of view 2000$ are cost related with the income from canada.
So we would pay canadian tax on 8'000$.


Thank to all of you, I hope you can help me to understand this complicate situation better.


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## makemerich (Oct 1, 2015)

Hire someone. There is far too much substance here for a quick and simple answer. Not to mention the fact that you shouldn't be taking advice on these matters from an internet forum.


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