The recommends that: an LP CIV regime be introduced into the of CIVs that provide tax flowthrough treatment; LP CIVs be required to meet all the characteristics of a CIV as set out in the Board’s recommendations in Chapter 4, including the widely held requirement; and an LP CIV be taken to be Australian resident if: the partnership is formed in Australia; or the partnership carries on business in Australia and has it central management and control in Australia. LP CIV Views in submissions A number of stakeholders submitted that flowthrough taxation in LP CIVs should be achieved by attributing the taxable income of the CIV to the limited partners with appropriate withholding tax rules applying with respect to taxable income attributed to nonresident limited partners. Stakeholders suggest that the preferred approach would be to exclude a class of LPs that meet certain widely held and investment tests (LP CIVs) from the existing LP corporate tax treatment in Division 5A, such that they would receive general partnership tax treatment, with the addition of appropriate loss limitation rules. The preferred approach would be to exclude a class of LPs which we call Collective Investment Vehicles LPs (CIVLPs) from the existing LP corporate treatment. This might be achieved by carving out LPs, meeting certain widely held and investment tests, from the current company tax treatment for LPs ... Appropriate integrity around the use of losses might be introduced using rules such as the approaches in other jurisdictions. For example, losses in UK LPs and UK LLPs can be deducted but limited to the capital contributed ... The CIV LP might be restricted to institutional and sophisticated investors under an appropriate regulatory regime. Ernst & Young Other stakeholders have submitted that, rather than introducing a carveout from Division 5A, LP CIVs could be taxed in the same way as MITs, which would be consistent with the principle that the tax treatment of a CIV should be determined by the nature of its investment activities rather than the structure of the entity through which the funds are pooled.
The recommends that: an LP CIV regime be introduced into the of CIVs that provide tax flowthrough treatment; LP CIVs be required to meet all the characteristics of a CIV as set out in the Board’s recommendations in Chapter 4, including the widely held requirement; and an LP CIV be taken to be Australian resident if: the partnership is formed in Australia; or the partnership carries on business in Australia and has it central management and control in Australia. LP CIV Views in submissions A number of stakeholders submitted that flowthrough taxation in LP CIVs should be achieved by attributing the taxable income of the CIV to the limited partners with appropriate withholding tax rules applying with respect to taxable income attributed to nonresident limited partners. Stakeholders suggest that the preferred approach would be to exclude a class of LPs that meet certain widely held and investment tests (LP CIVs) from the existing LP corporate tax treatment in Division 5A, such that they would receive general partnership tax treatment, with the addition of appropriate loss limitation rules. The preferred approach would be to exclude a class of LPs which we call Collective Investment Vehicles LPs (CIVLPs) from the existing LP corporate treatment. This might be achieved by carving out LPs, meeting certain widely held and investment tests, from the current company tax treatment for LPs ... Appropriate integrity around the use of losses might be introduced using rules such as the approaches in other jurisdictions. For example, losses in UK LPs and UK LLPs can be deducted but limited to the capital contributed ... The CIV LP might be restricted to institutional and sophisticated investors under an appropriate regulatory regime. Ernst & Young Other stakeholders have submitted that, rather than introducing a carveout from Division 5A, LP CIVs could be taxed in the same way as MITs, which would be consistent with the principle that the tax treatment of a CIV should be determined by the nature of its investment activities rather than the structure of the entity through which the funds are pooled.
CIV_Report.docx