General Partnerships and LLPs

General partnerships and LLPs with a First Nations partner(s) who is eligible to make exempt purchases on First Nations land are entitled to an exemption for their purchases on First Nations land, proportional to that First Nations partner’s interest in the partnership.  The purchases must meet all the criteria for the exemption for First Nations individuals or bands.

For example, an individual forms a general partnership with a First Nations individual.  Each of the general partners owns a 50% share of the partnership interest.  The purchase of taxable assets on First Nations land (that meets all the criteria for exemption) is 50% exempt from PST.

Limited Partnerships

Limited partnerships in which all of the partners are First Nations individuals or bands may purchase taxable goods on First Nations land exempt from PST, provided all the criteria for the exemption are met.

For example, a band forms a limited partnership to carry on a business in which all of the general and limited partners are First Nations individuals or bands.  Because all of the partners are First Nations individuals or bands, the purchase of taxable assets on First Nations land by the limited partnership (that meets all the criteria for exemption) is fully exempt from PST.

Limited partnerships in which one or more of the general or limited partners is a First Nations individual or band may or may not qualify for exemption from PST, depending on the terms of the partnership agreement.  

Note:  With all limited partnerships, the specific terms of the limited partnership agreement can affect how PST applies to the purchases made by the partnership.

Example 1

A limited partnership consists of a non-First Nations individual as the sole limited partner with a 99% interest in the partnership, and a band as the general partner with a 1% interest in the partnership.  Under the limited partnership agreement, the general partner (the band) acts as an agent for the limited partner and its powers and responsibilities include the sale and acquisition of assets for the partnership’s business.

In this case, assets purchased on First Nations land by the limited partnership are exempt from PST.  This is because a general partner in a limited partnership is considered to own the partnership’s assets and the general partner is a band.

Example 2

A limited partnership consists of a band as the sole limited partner with a 99% interest in the partnership, and a band-owned corporation as the general partner with a 1% interest in the partnership.  Under the limited partnership agreement, the corporate general partner acts as an agent for the limited partners and its powers and responsibilities include the sale and acquisition of assets for the partnership’s business.

In this case, assets purchased on First Nations land by the limited partnership are subject to PST.  The general partner is the purchaser and owner of the assets and a band-owned corporation does not qualify for exemption as a First Nations individual or band.  Although the general partner acts as agent for the limited partner, the limited partner’s band status does not impact the general partner’s obligation to pay PST since the limited partner does not own the assets.

For more information on the criteria for exemptions for purchases by First Nations individuals and bands on First Nations land, see Bulletin PST 314, Exemptions for First Nations.  If you have any questions or would like advice related PST issues related to partnerships involving first nations, please contact us at 604-688-4900 or by email at morgan@barbeau.co or paul@barbeau.co