Since 2006, the partners of Ontario limited liability partnerships (LLPs) have enjoyed “full shield” protection, which means that they are protected from most liabilities of the partnership except those arising from their own professional negligence. As a result, an LLP partner’s negative ACB will give rise to an immediate gain under s 40(3.1) of the Income Tax Act (Canada) because the partner is a “limited partner” under s 40(3.14). S 40(3.11) requires a member of a “professional partnership” (as defined in s 40(3.111)) to include in the calculation of ACB current-year income or losses.
Lorenzo Bonanno and Guy Buckley, “Limited Liability Partnerships”, Canadian Tax Highlights 25:2 (February 2017)
