Limited partner at-risk amount (s. 96(2.2))

A limited partner meets this term when a partnership reports a loss and the partner wants to deduct a share of it. Under s. 96(2.1), despite s. 96(1), the part of a share of a loss from a business (other than a farming business) or from property that exceeds the at-risk amount, after the reductions that subsection lists, is not deducted and is not part of the non-capital loss. For a partner that is not itself a partnership, it is deemed a limited partnership loss.

How the amount is built

• It starts with the adjusted cost base of the partner’s interest, plus, at the end of a fiscal period, the partner’s share of the partnership’s income for that period and the other amount the subsection adds
• It is reduced by amounts owing to the partnership, or to a person not dealing at arm’s length with it, by the partner or a non-arm’s-length person, subject to the exceptions in s. 96(2.2)(c)
• It is also reduced by amounts or benefits meant to offset a loss from being a member, such as a guarantee, subject to the exceptions in s. 96(2.2)

What to ask

The CRA’s T4068 guide says a limited partnership loss can be carried forward indefinitely and deducted in a later year to the extent the partner has a positive at-risk amount after deducting the amounts specified under subparagraph 111(1)(e)(ii). It also says the at-risk rules do not restrict farming losses that a partnership allocates to limited partners, and that the restricted farm loss rules apply to each partner. Ask what the partner’s adjusted cost base is and whether any loan, guarantee or other arrangement reduces it. See limited partnership and adjusted cost base, and the answer on buying into a partnership.