Distribution declaration mechanics
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Ingest-grounding pass on distributions/ and risks/: fix a second instance of the fabricated transfer-refusal-grounds claim (perpetual-equity-model.md's invented 10% notification threshold, replaced with the sourced 20% Take Over Bid mechanism); trim unsourced T5013 slip/capital-account specificity in distribution-declaration-mechanics.md; fix stale topic- prefixed wikilinks across distributions/; drop 2 dangling plain-text references to the archived Interest Coverage Ratio standalone article. risks/ category reviewed in full — no fabrication found, only clean
@@ -7,7 +7,7 @@ index_group: distribution-policy-and-mechanics type: topic content_type: topic quality: complete short_description: "How distributions in direct-hold limited partnerships are determined, declared, and paid: the ICR gate, proportional allocation across units, suspension protocol, and the relationship between distributions and the T5013 capital account." short_description: "How distributions in direct-hold limited partnerships are determined, declared, and paid: the ICR gate, proportional allocation across units, and the suspension protocol." status: active bcsc_class: public-disclosure-safe language_protocol: PROSE-TOPIC @@ -22,8 +22,7 @@ distribution is declared from an asset whose ICR is below 1.2×. When distributi declared, they are allocated to all outstanding units of the relevant asset in equal proportion — no unit carries a preferential distribution right over another. The mechanics are identical across all direct-hold solutions: the ICR gate, the proportional calculation, the suspension protocol, and the T5013 treatment apply consistently across every asset vehicle in the programme. and the suspension protocol apply consistently across every asset vehicle in the programme. ## Key takeaways @@ -33,10 +32,9 @@ vehicle in the programme. - Distributions are proportional to outstanding unit counts; an investor holding five percent of a direct-hold LP's units receives five percent of any distribution declared from that LP — no priority class, no catch-up mechanism, no preferred return. - Declared distributions are income allocations of the limited partnership and appear on the T5013 information slip issued to each limited partner; they reduce the limited partner's capital account and do not constitute a return of original capital unless the LP's cumulative losses have reduced the capital account below the original invested amount. - Declared distributions are income allocations of the limited partnership; the tax treatment of any distribution depends on each partner's own circumstances and is a matter for qualified tax counsel. - At least 90% of a fiscal year's Distributable Income is paid to limited partners within 90 days of fiscal year-end; the remaining 10% is retained for partnership purposes during the Initial Period, then applied to redeem First Secured Mortgage Debentures. @@ -94,23 +92,12 @@ not subsequently paid to unit holders who held units during the period of suspen general partner's discretion in declaring distributions does not extend to promising future distributions that compensate for the suspended period. ## T5013 treatment and capital accounts ## Tax treatment The limited partnership does not pay income tax at the entity level; income and deductible expenses pass through to the partners in proportion to their unit holdings. At the end of each fiscal year, the general partner issues a T5013 partnership information return and prepares T5013 slips for each limited partner showing: - The partner's proportional share of partnership income or loss - The partner's proportional share of any capital cost allowance claimed by the partnership - Any distributions received during the year - The closing capital account balance Distributions reduce the limited partner's capital account. If distributions in aggregate exceed the limited partner's capital account (which would occur if cumulative losses have been allocated to the partner in excess of the original contributed capital), the excess is a return of capital and may have specific tax treatment depending on the partner's circumstances and the nature of the income flows. expenses pass through to the partners in proportion to their unit holdings. The tax treatment of any distribution depends on each partner's own circumstances and is a matter for qualified tax counsel. ## See also