BENEFITS OF
JOINT VENTURES

Entering into a joint venture involves two or more businesses coming together under a contractual agreement to work together on a specific project for a certain period of time instead of forming a partnership. A joint venture is a temporary contract between participating companies that dissolves at a specific future date or when the project is completed. One member of a JV may contribute real property where the other contributes cash or expertise or a combination thereof. The income distributed from a JV can also be agreed upon amongst the parties to compensate the members of the JV equally or proportionate to their contributions. A JV is not defined in the Income Tax Act (“The Act”) and is not considered a separate legal entity. A JV can provide many benefits for both tax and legal purposes such as the potential multiplication of the small business deduction (SBD).