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Partnership or Joint Venture

It is important to distinguish between a partnership and a joint venture for the purposes of GST and QST registration.

Only a person can register for the GST and QST. For the purposes of these taxes, a “person” is a corporation, a trust, an individual, a partnership, a succession or a body that is an association, a club, a commission, a union or another organization.

A partnership can therefore register for GST and QST purposes. However, a joint venture cannot.

Definition of a partnership and a joint venture

The applicable laws and circumstances surrounding the group of persons determine whether they constitute a partnership or a joint venture.

A partnership is the result of a contract by which the parties agree to carry on an activity (including the operation of a business), to contribute thereto by combining property, knowledge or activities, and to share any resulting profits.

A joint venture is the result of an arrangement in which persons work together in a limited and defined business undertaking, which does not constitute a partnership, a trust or a corporation, and whose expenses and revenues are distributed in mutually agreed portions.

Election regarding a joint venture

The participants of a qualifying joint venture can jointly elect to designate one of them as the operator of the joint venture. The operator is responsible for accounting for GST and QST, on behalf of the participants, with respect to their purchases and sales made in the course of the activities of the joint venture.

To be eligible to make an election in respect of a joint venture, the joint venture must involve the exploration or exploitation of mineral deposits or a prescribed activity, such as the construction of a building. In addition, the designated operator must be a participant in the joint venture.

According to the administrative definition, a “participant” in a joint venture is one of the following:

  • a person who, under a joint venture agreement evidenced in writing, makes an investment by contributing resources and takes a proportionate share of any revenue or incurs a proportionate share of the losses from the joint venture activities
  • a person, without a financial interest, who is designated as the operator of the joint venture under an agreement in writing and is responsible for the managerial or operational control of the joint venture

Finally, the designated operator must complete form FP-621-V, Joint Venture Election: Election to Have the Operator of a Joint Venture Account for GST and QST,  for each co-venturer that wishes to jointly elect.

Further information

For more information, consult the following documents:

  • Distinguishing Between a Joint Venture and a Partnership for the Purposes of the Section 273 Joint Venture Election (P-171R)
  • Administrative Definition of a "Participant" in a Joint Venture (P-106)
  • The Effect of Making a Joint Venture Election on a Participant's Eligibility to Register and Claim Input Tax Credits (P-138R)
  • Tax Liability and Input Tax Credit Entitlement of Non-Electing Joint Venture Participant (P-139R)
  • Registration of a Partner (P-216)

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