Richmond Consultants is a partnership with three architects as members. The partnership
provides services throughout their local region. The partnership began operations on July 1,
of the current year.
While the partners themselves will undertake much of the work required by their various
contracts, some smaller projects may be contracted out. These outside contracts will require
the architect to undertake a well defined project for a fixed fee, plus related expenses. The
partners are uncertain as to the need for source deductions (income tax, El and CPP contribu-
tions) on amounts paid to these individuals.
The partners have hired you to assist them with some of the tax issues that will arise in the
operation of the partnership.
A. Explain to the partners how business income from partnerships is taxed in Canada.
B. Explain to the partners what choice they have in selecting a year end for their business.
C. Advise the partners on whether source deductions will be required on the amounts paid to
the outside architects.