Is it income? Joint Venture - an LLP or a Corporation

My question is: Canadian-specific


I live in Alberta. I was wondering if I need to pay tax on this money paid to me. I invested $10000 with a construction company that is doing a joint venture with a housing company. They bought some land and are developing it. I bought shares in this project. They have since borrowed some money to pay out to us. I received $2500. It's not really capital gain nor is it a distribution. I haven't recouped my original investment yet...this is just a partial payment. Do I have to pay tax this money this year? If so, would it be classified as capital gain or personal income?



david ingram replies:

Sorry, I can NOT help yuo with the information provided which shows that you have to
know what is happening when you make an investment.

If you invested as a Limited liability partner, the money you received could be a return
of capital, interest on the amount loaned to the LLP, or even a share of earnings if
they have sold some finished earnings.

If you invested as a shareholder with a loan to the joint venture, it could be a
partial return of the loan, interest on the loan or a dividend which is taxed quite
differently than the LLP share of profit.

What will / should happen is that an LLP will issue you a T5013 slip with all the
information and instructions as to what goes on what line and / or the Company will
issue you a T5 showing either interest, dividends, capital gains or all three or any two.

And, you might have something that is both shares of a corporation and a member of an
LLP and get one of everything. Go back to the person who sold it to you and get them
to explain it to you againb. Take a friend or financial advisor with you for both
moral support and as a ack up when you want tot know the answer again.