Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (No. 6) 1992 No. 227 of 1992 - SECT 9

9. After Division 5 of Part III of the Principal Act the following Division is
inserted:
          "Division 5A-Income of certain limited partnerships


"Subdivision A-Preliminary Object

"94A. The object of this Division is to provide for certain limited
partnerships to be treated as companies for tax purposes. Interpretation

"94B. In this Division:
'corporate limited partnership' has the meaning given by section 94D;
'income tax law' means:

   (a)  this Act (other than this Division); and

   (b)  an Act that imposes any tax payable under this Act; and

   (c)  the Income Tax Rates Act 1986; and

   (d)  the Taxation Administration Act 1953, so far as it relates to an Act
        covered by paragraph (a), (b) or (c); and

   (e)  any other Act, so far as it relates to an Act covered by paragraph
        (a), (b), (c) or (d); and

   (f)  regulations under an Act covered by any of the preceding paragraphs;
'limited partnership' means a partnership where the liability of at least one
of the partners is limited;
'year of income' means (except in paragraph 94L(b)) the year of income in
which 19 August 1992 occurred or a later year of income. Continuity of limited
partnership not affected by changes in composition

"94C. For the purposes of this Division, a change in the composition of a
limited partnership does not affect the continuity of the partnership.

"Subdivision B-Corporate limited partnerships Corporate limited partnerships

"94D. For the purposes of this Division, a limited partnership is a corporate
limited partnership in relation to a year of income of the partnership if:

   (a)  the year of income is the 1995-96 year of income or a later year of
        income; or

   (b)  the partnership was formed on or after 19 August 1992; or

   (c)  both:

        (i)    the partnership was formed before 19 August 1992; and

        (ii)   the partnership does not pass the continuity of business test
               set out in section 94E; or

   (d)  all of the following apply:

        (i)    the partnership was formed before 19 August 1992;

        (ii)   a change in the composition of the partnership occurs during
               the period:

                (A)  beginning on 19 August 1992; and

                (B)  ending at the end of the year of income;

        (iii)  the partners do not elect, in accordance with section 94F, that
               the partnership is not to be treated as a corporate limited
               partnership in relation to the year of income. Continuity of
               business test

"94E. In determining whether a limited partnership is a corporate limited
partnership in relation to a year of income, the partnership passes the
continuity of business test if, and only if:

   (a)  at all times during the period:

        (i)    beginning on 19 August 1992; and

        (ii)   ending at the end of the year of income; the partnership
               carried on the same business as it carried on immediately
               before the beginning of that period; and

   (b)  the partnership did not, at any time during that period, derive income
        from a business of a kind that it did not carry on, or from a
        transaction of a kind that it had not entered into in the course of
        its business operations, before that period. Change in composition of
        limited partnership-election that partnership not be treated as an
        eligible limited partnership

"94F. An election referred to in paragraph 94D(d) in relation to a limited
partnership and in relation to a year of income has no effect unless:

   (a)  the partnership passes the continuity of ownership test set out in
        section 94G; and

   (b)  the election is made:

        (i)    within 6 months after the end of the later of the following
               years of income:

                (A)  the year of income to which the election relates;

                (B)  the year of income in which the
                     Taxation Laws Amendment Act  (No. 6) 1992 received the
                     Royal Assent; or

        (ii)   within such further period as the Commissioner allows.
               Continuity of ownership test

"94G. In determining whether a limited partnership is a corporate limited
partnership in relation to a year of income, the partnership passes the
continuity of ownership test if, and only if:

   (a)  at all times during the period:

        (i)    beginning on 19 August 1992; and

        (ii)   ending at the end of the year of income; more than 50% of the
               interests in the partnership were held by persons who,
               immediately before that period, held more than 50% of the
               interests in the partnership; or

   (b)  the condition set out in paragraph (a) is not satisfied only because
        of the acquisition during so much of that period as occurred before 1
        July 1993 of interests in the partnership, where the acquisitions are
        in response to, and in accordance with the terms of:

        (i)    a prospectus, offer or invitation issued before 19 August 1992;
               or

        (ii)   if that prospectus, offer or invitation was varied before 19
               August 1992-that prospectus, offer or invitation as so varied.

"Subdivision C-Corporate tax modifications applicable to corporate
limited partnerships Corporate tax modifications applicable to corporate
limited partnerships

"94H. If a partnership is a corporate limited partnership in relation to a
year of income, the income tax law has effect, in relation to the partnership
and in relation to the year of income, subject to the changes set out in the
following provisions of this Subdivision.

"Company" includes corporate limited partnership

"94J. A reference in the income tax law (other than the definitions of
'dividend', and 'resident' or 'resident of Australia', in section 6 of this
Act) to a company or to a body corporate includes a reference to the
partnership.

"Partnership" does not include corporate limited partnership

"94K. A reference in the income tax law to a partnership does not include a
reference to the partnership.

"Dividend" includes distribution of corporate limited partnership

"94L. A reference in the income tax law to a dividend:

   (a)  includes a reference to a distribution made by the partnership,
        whether in money or in other property, to a partner in the
        partnership; and

   (b)  does not include a reference to a distribution to the extent to which
        the distribution is attributable to profits or gains arising during a
        year of income in relation to which the partnership was not a
        corporate limited partnership. Drawings etc. deemed to be dividends
        paid out of profits

"94M.(1) If the partnership pays or credits an amount to a partner in the
partnership:

   (a)  against the profits or anticipated profits of the partnership; or

   (b)  otherwise in anticipation of the profits of the partnership; (whether
        or not the amount of the profits or anticipated profits is
        ascertainable), the amount paid or credited is taken, for the purposes
        of the income tax law, to be a dividend paid by the partnership to the
        partner out of profits derived by the partnership.

"(2) If the partnership makes a subsequent distribution, the Commissioner must
take such steps (if any) as are necessary to ensure that the partner is not
subject to double taxation.

"Private company" does not include corporate limited partnership

"94N. A reference in the income tax law to a private company in relation to
the year of income does not include a reference to the partnership.

"Share" includes interest in corporate limited partnership

"94P. A reference in the income tax law to a share includes a reference to an
interest in the partnership.

"Shareholder" includes partner in corporate limited partnership

"94Q. A reference in the income tax law to a shareholder includes a reference
to a partner in the partnership.

"Liquidator" may include partner in corporate limited partnership

"94R. For the purposes of the income tax law:

   (a)  a reference to the liquidator of the partnership includes a reference
        to a partner in the partnership who carries out the winding-up of the
        partnership; and

   (b)  a reference to distributions made by a liquidator in the course of
        winding up the partnership includes a reference to distributions made
        by such a partner to himself or herself in the course of winding-up
        the partnership. Continuity of corporate limited partnership not
        affected by changes in composition

"94S. For the purposes of the income tax law, a change in the composition of
the partnership does not affect the continuity of the partnership. Residence
of corporate limited partnership

"94T. For the purposes of the income tax law, the partnership is a resident or
a resident of Australia if, and only if:

   (a)  the partnership was formed in Australia; or

   (b)  either:

        (i)    the partnership carries on business in Australia; or

        (ii)   the partnership's central management and control is in
               Australia. Incorporation

"94U. For the purposes of the income tax law, the partnership is taken to have
been incorporated:

   (a)  in the place where it was formed; and

   (b)  under a law in force in that place. Obligations and offences

"94V.(1) The application of the income tax law to the partnership as if the
partnership were a company is subject to the following changes:

   (a)  obligations that would be imposed on the partnership are imposed
        instead on each partner, but may be discharged by any of the partners;

   (b)  the partners are jointly and severally liable to pay any amount that
        would be payable by the partnership;

   (c)  any offence against the income tax law that would otherwise be
        committed by the partnership is taken to have been committed by each
        of the partners.

"(2) In a prosecution of a person for an offence that the person is taken to
have committed because of paragraph (1)(c), it is a defence if the person
proves that the person:

   (a)  did not aid, abet, counsel or procure the relevant act or omission;
        and

   (b)  was not in any way knowingly concerned in, or party to, the relevant
        act or omission (whether directly or indirectly and whether by any act
        or omission of the person). Pre-1995-96 years of income-certain
        corporate obligations do not arise if partnership became a corporate
        limited partnership because of something which happened during the
        year of income

"94W. If:

   (a)  the year of income is earlier than the 1995-96 year of income; and

   (b)  the partnership is a corporate limited partnership in relation to the
        year of income because of the occurrence of one or more events during
        the year of income which resulted in the partnership failing to pass:

        (i)    the continuity of business test set out in section 94E; or

        (ii)   the continuity of ownership test set out in section 94G; and

   (c)  at a time during the period:

        (i)    beginning at the beginning of the year of income; and

        (ii)   ending at the time when that event, or the earliest of those
               events, occurred; an obligation was imposed on the partnership
               under the income tax law in the partnership's capacity as a
               company; and

   (d)  the partnership passed both of the following tests in relation to each
        earlier year of income:

        (i)    the continuity of business test set out in section 94E;

        (ii)   the continuity of ownership test set out in section 94G; the
               income tax law has effect as if that obligation had never
               arisen. Modification of loss provisions

"94X. Sections 50H and 80A apply in relation to the partnership as if the
provisions relating to voting power had not been enacted. Modification of
provisions relating to the collection of company tax

"94Y. In spite of anything in Division 1B of Part VI, for the purposes of that
Division, the notional tax of the partnership in respect of the year of income
is taken to be nil if:

   (a)  the year of income is the year of income in which 19 August 1992
        occurred; or

   (b)  the partnership was not a corporate limited partnership in relation to
        the immediately preceding year of income.".