INCOME TAX ASSESSMENT ACT 1997 - SECT 820.795 What is a foreign controlled Australian partnership?

INCOME TAX ASSESSMENT ACT 1997 - SECT 820.795

Corporate limited partnership

  (1)   A * corporate limited partnership is a foreign controlled Australian partnership (or an FCAP ) at a particular time if, and only if, at that time:

  (a)   it is an * Australian entity; and

  (b)   at least one of the following subparagraphs applies to it:

  (i)   not more than 5 * foreign entities (each of which holds a * TC control interest in the partnership that is at least 1%) hold a total of TC control interests in the partnership that are 50% or more;

  (ii)   at least one * general partner of the partnership is a foreign entity or a * foreign controlled Australian entity.

Partnership that is not a corporate limited partnership

  (2)   A partnership other than a * corporate limited partnership is a foreign controlled Australian partnership (or an FCAP ) at a particular time if, and only if, at that time:

  (a)   at least one of the partners is an * Australian entity; and

  (b)   at least one of the following subparagraphs applies to it:

  (i)   not more than 5 * foreign entities (each of which holds a * TC control interest in the partnership that is at least 1%) hold a total of TC control interests in the partnership that is 50% or more;

  (ii)   a foreign entity holds a TC control interest in the partnership that is 40% or more, and no other entity or entities (except an * associate entity of the foreign entity or entities including the foreign entity or its associate entities) control the partnership.

Exception

  (3)   Despite subsections   (1) and (2), a partnership is not an FCAP at a particular time if, at that time:

  (a)   the partnership would, apart from this subsection, be an FCAP only because of subparagraph   (1)(b)(i), (2)(b)(i) or (ii); but

  (b)   the total of the following interests would be less than 20% if paragraphs 820 - 875(2)(a) and (b) were disregarded:

  (i)   the * TC direct control interest in the partnership held by the * foreign entity or entities mentioned in subparagraph   (1)(b)(i), (2)(b)(i) or (ii);

  (ii)   the * TC indirect control interest in the partnership held by the foreign entity or entities;

  (iii)   the TC direct control interests in the partnership held by any * associate entities of the foreign entity or entities (other than any TC direct control interests that have been taken into account in calculating the interest mentioned in subparagraph   (ii));

  (iv)   the TC indirect control interests in the partnership held by the entity's associate entities (other than any TC indirect control interests that have been taken into account in calculating the interest mentioned in subparagraph   (ii)).

Note:   Paragraphs 820 - 875(2)(a) and (b) set out special rules under which an entity is taken to hold a TC control tracing interest in another entity that is equal to 100%, which could then be taken into account in calculating a TC indirect control interest.