Limited Partnership structure defeated in D Marks case

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Limited Partnership structure defeated in D Marks case - 22 July 2016

Tax insights

The Australian Taxation Office has been successful in the Full federal Court in challenging an arrangement that purported to be a corporate limited partnership. The Deloitte Tax insight looks at the case and considers the implications for taxpayers.

On 22 June 2016, the Full Federal Court (the Court) decided in D Marks Partnership v Commissioner of Taxation [2016] FCAFC 86 that a purported limited partnership structure failed to qualify for tax treatment as a Corporate Limited Partnership (CLP).  The Court upheld the decision of the Administrative Appeals Tribunal (AAT) and assessments made by the Australian Taxation Office on the grounds that, under Queensland state law, a limited partnership did not exist and therefore the arrangement was not a CLP for tax purposes.  

This decision has the potential for widespread implications on arrangements purporting to be an Australian limited partnership and a Division 5A CLP, and requires a risk-assessment of facts and circumstances surrounding the arrangement, and in particular, the initial establishment of such structures. 

Limited Partnership structure defeated in D Marks case
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