British Columbia has recently published Bulletin PST 319, “Partnerships” which discusses how the provincial sales tax (PST) applies to the acquisition and transfer (in or out) of taxable partnership assets, or when a new partner acquires an interest in the partnership.
A partnership entity cannot own property – it is each partner who owns a proportionate share of partnership assets. Each partner that contributes assets to the partnership is, in effect, considered to have transferred an interest in the assets to the other partner(s). Therefore, each partner is obligated to pay PST on the portion of the value of the taxable assets that is equal to their interest in the partnership.
The opposite also applies, i.e. a transfer of assets from a partnership to a partner is considered a sale of assets from all the partners. Consequently, the partner(s) acquiring these assets must pay PST on the portion not already attributed to them.
This document also discusses the dissolution and disposition of an interest in a partnership, including examples to illustrate various scenarios.
For PST purposes, limited partnerships (having both limited and general partners) are treated differently than general partnerships. Unless provided otherwise in writing, it is the general partner who is considered to own the partnership’s assets. Accordingly, a limited partner is not considered to be purchasing an interest in the partnership’s assets and will not pay PST.
Lastly, this document discusses partnerships involving First Nations and covers general, limited liability and limited partnerships.