The much anticipated decision in the Commissioner of Taxation v Resource Capital Fund IV LP (RCF IV) was handed down on Tuesday 2 April 2019. The full bench of the Federal Court comprising of five judges unanimously found for the Commissioner overturning the single Federal Court finding of Justice Pagone. The decision was a comprehensive victory for the Australian Taxation Office (ATO) covering a number of very important areas of taxation, including:

• the manner in which income of a corporate limited partnership (“CLP”) is taxed;
• the eligibility of CLPs and partners of CLP to benefits of Double Tax Agreements;
  
• source of income;
• reliance on Public Rulings;
• the determination of what is “real property” for the purposes of Double Tax Agreements’;
• the determination of what is Taxable Australian Real Property for the purposes of the Income Tax Assessment Act 1997 (“IITA 97”); and
• how the value of such property should be determined.

The Full Federal Court had to contend with interpreting the deeming provisions of Division 5A of the Income Tax Assessment Act (“ITAA 36”) which modify the provisions of the ITAAs 36 &97 to treat CLPs as companies for most purposes of the ITAAs. As the decision in RCF IV illustrates, these deeming provisions are not perfect and a number of anomalies have been identified in trying to apply these provisions in practice.

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