JV's and Tax Filing Consistency

Submitted by hr@thewindrosegroup.ca on Wed, 01/06/2021 - 17:11

Question for George Dube or Peter Cuttini - our investor accounting specialists - When securing financing especially for AAA rates, we often need to provide full T1 Generals both personally and corporately for the last two years to the lender. The main reason is to determine both income as well as profit/loss from an existing rental portfolio for debt service ratios. We have come across a number of times where JV partners are not coordinating how they are filing the profit/losses on their portfolio e.g. one might not even declare at all while the other does 50% as per JV Agreement. This creates a red flag by the lender as you own the property (on title) but aren't showing it on your tax returns). I am assuming this is a problem with CRA and eventually gets flagged. Any advice on how we can help investors understand how important the coordination is on JV's and take into consideration the tax implications when calculating profit/loss on the overall deal?