Ontario Limited Partnership (LP) in Canada

Limited Partnership · Formation from $155

Last verified: June 13, 2026

Corporate Tax

0.0%

State Tax

0.0%

Formation Cost

$155

Annual Fee

Comparison Scores

Privacy, remote setup, banking, and tax efficiency

Privacy6/10

Remote Setup9/10

Banking6/10

Tax Efficiency9/10

Overall Score8/10

Calculate full formation cost

Break down one-time filing fees and recurring costs for any supported entity type.

Who Should Choose This?

Profiles that typically benefit from this entity

Non-resident entrepreneurs seeking a prestigious North American entity without local tax liabilities (if operating strictly outside Canada).
IT consultants, software developers, and freelancers with global clients who need a reputable invoicing entity.
E-commerce businesses needing access to Stripe, PayPal, and international payment gateways.
Investment funds or joint ventures needing a flexible, flow-through tax structure to avoid double taxation.

Who Should Avoid This?

Scenarios where another structure may be better

Founders who absolutely need a traditional Canadian bank account but cannot travel to Canada to open one.
Businesses with high liability risks where the General Partner cannot be structured as a separate corporate entity to shield personal liability.
Entrepreneurs looking for an easy path to Canadian immigration or work permits, as this requires an active local business with economic substance.

Advantages

+No corporate income tax in Canada if no business is conducted locally and partners are non-residents (flow-through entity).
+Highly prestigious Canadian jurisdiction, excellent for global business reputation and client trust.
+No residency requirements for General or Limited Partners; the LP can be 100% foreign-owned.
+No minimum capital requirement to establish the Limited Partnership.
+Easy access to multi-currency accounts via fintechs (Wise, Airwallex) and payment gateways like Stripe and PayPal.
+Limited partners have their personal liability restricted strictly to their investment amount.

Disadvantages

-Traditional Canadian bank accounts (e.g., RBC, TD) are very difficult to open without a resident partner and an in-person visit.
-The General Partner has unlimited liability for the debts and obligations of the LP.
-Must renew the registration (Declaration Form 3) every 5 years with a provincial fee of CAD 210.
-If business is conducted inside Canada, non-resident partners may become subject to Canadian tax and filing obligations.
-Cannot be used easily to obtain a Canadian work permit or permanent residency without active local operations and employees.

Formation Steps

Choose a unique business name and obtain a NUANS Name Search Report (valid for 90 days).

Draft and sign the Limited Partnership Agreement (LPA) outlining partner roles, liability, and profit distribution.

Secure an Ontario registered office address, which is legally required for the registration.

File Declaration Form 3 under the Limited Partnerships Act with the Ontario Business Registry.

Pay the CAD 210 provincial registration fee to the Ontario government.

Receive the 9-digit Ontario Business Identification Number (BIN) and official registration documents.

Apply for a Canadian Business Number (BN) with the CRA if required for tax, payroll, or import/export purposes.

Open a business bank account using fintech platforms like Wise Business or Airwallex to manage global payments.

Cost Breakdown

Detailed breakdown of formation and ongoing costs

Item	Type	Amount
State filing fee (Declaration Form 3)	One-time	$155
NUANS Name Search Report	One-time	$15
Registered Office Address	Annual	$150
First year total		$320
Annual ongoing		$150

Real-World Examples

Typical use cases for this entity type

A European software development agency uses an Ontario LP to bill US and Canadian clients, benefiting from the prestigious Canadian image while paying taxes only in their home country.
An e-commerce entrepreneur in Latin America forms an Ontario LP to access Stripe and Shopify Payments, using Wise Business to receive USD and CAD payouts seamlessly.
A group of international investors forms an Ontario LP as a private equity fund vehicle, utilizing its flow-through tax status to avoid double taxation on their global investments.

Common Mistakes

Pitfalls to avoid during setup and operations

Assuming the LP provides limited liability for all partners (the General Partner always has unlimited liability).
Failing to renew the LP registration every 5 years, leading to expiration, loss of the business name, and penalties.
Conducting business inside Canada and failing to realize this triggers Canadian tax and filing obligations for the non-resident partners.
Trying to open a traditional bank account remotely and wasting weeks, instead of immediately using fintech solutions like Wise or Airwallex.
Not having a properly drafted Limited Partnership Agreement (LPA), causing legal disputes over profit allocation and management control.

Other entity types

Other formation options in Canada

Ontario Corporation

Primary

Tax: 15.0%
Formation: $220

Federal Corporation

Tax: 15.0%
Formation: $146

British Columbia Corporation

Tax: 15.0%
Formation: $277

Alberta Corporation

Tax: 15.0%
Formation: $200

Compare with Other Countries

Country / Type	Tax	Formation	Annual
🇨🇦 Ontario Limited Partnership (LP)(Limited Partnership)	0.0%	$155	$0

🇨🇦 vs 🇺🇸 United States 🇨🇦 vs 🇪🇪 Estonia 🇨🇦 vs 🇬🇧 United Kingdom 🇨🇦 vs 🇮🇪 Ireland All comparisons →

FAQ

Do non-resident partners pay tax in Canada?

If the LP does not carry on business in Canada and derives no Canadian-source income, non-resident partners generally do not pay Canadian income tax.

Can a single person form an Ontario LP?

Yes, one person can act as both the General Partner and the Limited Partner, though typically it involves at least two distinct entities or individuals to clearly separate liability.

Is a local Canadian director or partner required?

No, there are no residency requirements for the partners of an Ontario LP. They can be 100% foreign.

How often do I need to renew the LP registration?

The registration (Declaration Form 3) must be renewed every 5 years before the anniversary date to keep the LP active.

Can I open a traditional bank account in Canada remotely?

It is highly challenging for non-residents to open an account with traditional banks (like RBC or TD) without visiting a branch in person. Fintechs like Wise or Airwallex are recommended instead.

What is the liability of the partners?

The General Partner has unlimited liability for the business, while Limited Partners are only liable up to the amount of capital they contributed.

Do I need to file an annual tax return in Canada?

If the LP has no Canadian operations or resident partners, it generally does not need to file a T5013 partnership return, but professional tax advice should be sought to confirm specific obligations.

Can a foreign corporation be a partner?

Yes, foreign corporations can be partners. However, if a foreign corporation acts as the General Partner, it may need to register extra-provincially in Ontario first.

Detailed Tax Rates

Corporate Income Tax

From	To	Rate
$0	$500,000	12.2%
$500,000	No limit	26.5%

An Ontario Limited Partnership is a flow-through entity and does not pay corporate tax itself. Profits are allocated to partners. Corporate partners resident in Canada are subject to the combined federal and Ontario corporate tax rates shown (12.2% small business rate up to CAD 500,000, and 26.5% general rate).

Personal Income Tax (Top rate: 53.5%)

From	To	Rate
$0	$58,523	14.0%
$58,523	$117,045	20.5%
$117,045	$181,440	26.0%
$181,440	$258,482	29.0%
$258,482	No limit	33.0%

Individual partners pay personal income tax on their share of LP profits. The brackets shown are the 2026 federal rates. Ontario levies additional provincial tax (up to 13.16%) and surtaxes, bringing the combined top marginal rate to 53.53%.

Capital Gains Tax

26.8%

In Canada, 50% of capital gains are included in taxable income for 2026 (the previously proposed increase to 66.67% was cancelled). For an Ontario resident at the top marginal tax rate, the effective maximum capital gains tax rate is approximately 26.76%.

VAT / GST

13.0%

Registration Threshold: CAD30,000

Non-resident digital service providers must register for and collect GST/HST if their sales to Canadian consumers exceed CAD 30,000 over a 12-month period.

Withholding Tax

Dividends25.0%

Royalties25.0%

Interest25.0%

Canada's standard non-resident withholding tax rate is 25% under Part XIII of the Income Tax Act. This is frequently reduced to 5%, 10%, or 15% under tax treaties. Arm's-length interest payments are generally exempt.

Payroll & Social Security

Employer8.2%

Employee7.6%

For 2026, the base employee rate is ~7.58% (5.95% CPP + 1.63% EI) and the employer rate is ~8.23% (5.95% CPP + 2.28% EI). Additional CPP2 contributions apply to earnings between CAD 74,600 and CAD 85,000.

Other Taxes

Employer Health Tax (EHT)

Ontario levies an EHT on employers at a rate of up to 1.95% on total remuneration paid to employees. Eligible employers are exempt on the first CAD 1 million of payroll.

Corporate Minimum Tax (CMT)

Ontario imposes a 2.7% Corporate Minimum Tax on corporations with total assets exceeding CAD 50 million and annual gross revenues exceeding CAD 100 million.

Incentives & Support

SR&ED (Scientific Research and Experimental Development) Program

Tax incentives for conducting R&D in Canada. As an LP is a flow-through entity, SR&ED investment tax credits can be allocated to the partners.

Up to 35% refundable tax credit on eligible R&D expenditures for Canadian-controlled private corporation (CCPC) partners, or 15% non-refundable for others.

Eligibility: Must conduct qualifying basic research, applied research, or experimental development in Canada.

Formation Requirements

Minimum Capital

No requirement

There is no minimum or maximum capital requirement for an Ontario Limited Partnership.

Local Director

Not Required

There are no residency requirements for the General Partner or Limited Partners. They can be individuals or corporations from anywhere in the world.

Registered Office

Required

Virtual office allowed. $100 - $300/year

Notarization Required

Power of Attorney (Remote)

Required

A Power of Attorney may be required if a local agent or legal representative is signing the Declaration Form 3 on behalf of the General Partner.

Timeline

Standard: 2-3 business days days

Expedited: 1 business day days ($100)

Required Documents

1Declaration Form 3 (under Limited Partnerships Act)
2Limited Partnership Agreement (LPA)
3NUANS Name Search Report
4Passport copy of the General Partner(s)
5Proof of Ontario Registered Address

Compliance & Reporting

Annual Filings

T5013 Partnership Information Return

Penalty: Late filing penalty of CAD 25 per day, up to a maximum of CAD 2,500.

March 31 (if all partners are individuals) or 5 months after fiscal year-end (if corporate partners)

Declaration Form 3 Renewal

Penalty: Late renewal incurs a CAD 150 penalty fee on top of the CAD 210 renewal fee.

Every 5 years before the anniversary date

Audit Requirement

Not Required

Audits are generally not required for private LPs unless stipulated in the Partnership Agreement or requested by investors/lenders.

Accounting Standard

ASPE / IFRS

Tax Return Deadline

March 31 (for individual partners) or 5 months after fiscal year-end (for corporate partners)

VAT Filing Frequency

Annually (revenue under CAD 1.5M), Quarterly (CAD 1.5M - 6M), or Monthly (over CAD 6M)

Data Protection

Subject to PIPEDA (Personal Information Protection and Electronic Documents Act) for commercial activities.

Banking & Payments

Wise Business

Remote-friendly

Excellent for non-resident LP partners. Offers multi-currency accounts (CAD, USD, EUR, GBP) and can be opened entirely remotely.

Airwallex

Remote-friendly

Great alternative for global e-commerce and SaaS businesses. Provides local CAD and USD account details with low FX fees.

Loop

Remote-friendly

A Canadian fintech platform tailored for cross-border businesses, offering multi-currency accounts and corporate cards without monthly fees.

RBC Royal Bank

One of Canada's largest traditional banks. Highly reputable but generally requires an in-person branch visit and a Canadian resident director or partner.

Payment Gateways

Stripe, PayPal, Square, Helcim, Moneris

Currency

CAD

Multi-Currency: Supported

Account Opening

Opening a traditional bank account (e.g., RBC, TD) for an Ontario LP with only non-resident partners is highly challenging and typically requires an in-person visit. However, non-resident founders can easily open business accounts remotely using fintech platforms like Wise Business, Airwallex, or Loop.

Practical Information

Timezone

UTC-5 to UTC-6

Business Language

English

Legal System

Common Law

Ease of Doing Business

#23

IP Protection

Canada offers robust intellectual property protection through the Canadian Intellectual Property Office (CIPO). Trademarks, patents, and copyrights are strictly enforced under common law and federal statutes.

Double Tax Treaties

94 countries

Notable treaties: United States, United Kingdom, Germany, France, Japan, Australia

Visa & Residency Options

C11 Entrepreneur Work Permit

Allows entrepreneurs to obtain a work permit by establishing a business that brings 'significant economic, social, or cultural benefit' to Canada. It can eventually lead to permanent residency.

Intra-Company Transfer (ICT)

Allows foreign business owners to expand their existing company to Canada and transfer themselves as executives or senior managers. Requires an active foreign company.