(10B) Where Division 392 (Long‑term averaging of primary producers’ tax liability) of the Income Tax Assessment Act 1997 applies in relation to the income of a taxpayer of the year of income, the taxpayer is liable to pay further tax upon the relevant part of the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) in respect of the relevant part of the taxable income and is, in addition, liable to pay further tax upon the prescribed part of the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) in respect of the prescribed part of the taxable income.
(10C) For the purposes of subsections (10A) and (10B):
(a) the prescribed part of the eligible portion of the taxable income of a taxpayer of a year of income is:
(i) in a case to which subparagraph (ii) does not apply—the sum of:
(A) the amount ascertained by deducting from so much of the assessable primary production income of the taxpayer as is also income to which this section applies so much of the deductions allowable in his or her assessment as constitutes primary production deductions and is also deductible in accordance with subsection (10) from income to which this section applies; and
(B) the amount (if any) ascertained in accordance with the formula Start formula start fraction A times B over C end fraction end formula, where:
A is the amount shown in the following table:
Value of A for formula
Item Taxpayer’s taxable non‑primary production income Value of A
1 Nil Nil
2 Not more than $5,000 (but more than nil) Difference between basic taxable income and taxable primary production income
3 Between $5,000 and $10,000 $10,000 taxable non‑primary production income
4 At least $10,000 Nil
B is the number of whole dollars in the amount ascertained by deducting from the eligible portion the amount calculated in accordance with sub‑subparagraph (A); and
C is the number of whole dollars in the amount ascertained by deducting from the taxable income of the taxpayer of the year of income the taxable primary production income of the taxpayer of the year of income; and
(ii) in a case where the taxpayer’s primary production deductions for the year of income exceed the taxpayer’s assessable primary production income for that year—the amount ascertained in accordance with the formula Start formula start fraction A times B over C plus D end fraction end formula, where:
Item Taxpayer’s taxable non‑primary production income Value of A
1 Nil Nil
2 Not more than $5,000 (but more than nil) Basic taxable income
3 Between $5,000 and $10,000 Non‑primary production shade‑out amount worked out under subsection 392‑90(3) of the Income Tax Assessment Act 1997
4 At least $10,000 Nil
B is the number of whole dollars in the eligible portion.
C is the number of whole dollars in the taxable income of the taxpayer of the year of income; and
D is the number of whole dollars in the difference between the taxpayer’s primary production deductions for the year of income and the taxpayer’s assessable primary production income for that year; and
(b) the relevant part of the eligible portion of the taxable income of the taxpayer is the amount ascertained by deducting from the amount of that eligible portion so much of that eligible portion as is the prescribed part of that eligible portion.
(11) Where:
(a) section 98 applies in relation to the net income of a trust estate or a share of that net income; and
(b) this section applies to a portion (in this subsection referred to as the relevant portion) of that net income or of that share of that net income, as the case may be;
the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with subsection (12A) or (12B), upon the relevant portion of that net income or of that share of that net income, as the case may be.
(12) Where:
(a) section 99 applies in relation to the net income of a trust estate or a part of that net income; and
(b) this section applies to a portion (in this section referred to as the eligible trust portion) of that net income or of that part of that net income, as the case may be;
the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with subsection (12A) or (12B), upon the eligible trust portion.
(12A) Where Division 16 does not apply in respect of the net income of a trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the relevant part of the net income of a trust estate.
(12B) Where Division 16 applies in respect of the net income of a trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the relevant part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the relevant part of the net income of a trust estate and is, in addition, liable to pay further tax upon the prescribed part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the prescribed part of the net income of a trust estate.
(12C) For the purposes of subsections (12A) and (12B):
(a) the prescribed part of the eligible trust portion in relation to a trust estate in relation to a year of income is:
(i) in a case to which subparagraph (ii) does not apply—the sum of:
(A) the amount ascertained by deducting from so much of the assessable primary production income of the trust estate of the year of income as is also income that was taken into account in determining the amount of the eligible trust portion so much of the deductions allowable in the assessment of the trustee of the trust estate as constitutes relevant primary production deductions and was also deductible in accordance with subsection (5) in determining the amount of the eligible trust portion; and
(B) the amount (if any) ascertained in accordance with the formula Start formula start fraction A times B over C end fraction end formula, where:
A is the amount of the notional net income from primary production of the trust estate of the year of income.
B is the number of whole dollars in the amount ascertained by deducting from the eligible trust portion the amount calculated in accordance with sub‑subparagraph (A); and
C is the number of whole dollars in the amount ascertained by deducting from the net income of the trust estate of which the eligible trust portion is a portion the actual net income from primary production of the trust estate of the year of income; and
(ii) in a case where the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate of the year of income exceeds the assessable primary production income of the trust estate of the year of income—the amount ascertained in accordance with the formula Start formula start fraction A times B over C plus D end fraction end formula, where:
A is the amount of the notional net income from primary production of the trust estate of the year of income.
B is the number of whole dollars in the eligible trust portion.
C is the number of whole dollars in the net income of the trust estate of which the eligible trust portion is a portion; and
D is the number of whole dollars in the amount by which the net income of the trust estate of which the eligible trust portion is a portion would have been increased if the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate of the year of income had been equal to the assessable primary production income of the trust estate of the year of income; and
(b) the relevant part of the eligible trust portion in relation to a trust estate is the amount ascertained by deducting from that eligible trust portion so much of that eligible trust portion as is the prescribed part of that eligible trust portion.
(13) In this section:
prescribed deductions, in relation to a trust estate, means the deductions that are allowable in calculating in accordance with section 95 the net income of the trust estate.
share in the net income of a partnership, in relation to a partner, means:
(a) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was a resident; and
(b) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.
(14) In this section, actual net income from primary production, assessable primary production income, notional net income from primary production and relevant primary production deductions have the same respective meanings as in section 156.
(15) In this section, the following terms have the same meanings that they have in Division 392 (Long‑term averaging of primary producers’ tax liability) of the Income Tax Assessment Act 1997:
(a) assessable primary production income;
(b) basic taxable income;
(c) non‑primary production shade‑out amount;
(d) primary production deductions;
(e) taxable non‑primary production income;
(f) taxable primary production income.
Division 5A—Income of certain limited partnerships
Subdivision A—Preliminary
94A Object
The object of this Division is to provide for certain limited partnerships to be treated as companies for tax purposes.
94B Interpretation
In this Division:
income tax law means:
(a) this Act (other than this Division and Division 830 of the Income Tax Assessment Act 1997); 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.
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.
94C Continuity of limited partnership not affected by changes in composition
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
94D Corporate limited partnerships
(1) 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.
(2) However, a partnership that is a VCLP, an ESVCLP, an AFOF or a venture capital management partnership cannot be a corporate limited partnership.
Note 1: This subsection can apply without the partnership meeting the applicable registration requirements under the Venture Capital Act 2002. It must be registered under that Act in order to be a VCLP, an ESVCLP or an AFOF, but it is possible for it to remain registered while the requirements are not met.
Note 2: VCLPs, ESVCLPs, AFOFs and VCMPs are taxed as ordinary partnerships under Division 5.
Note 3: If the partnership’s registration as a VCLP, ESVCLP or AFOF is unconditional, some partners’ share in capital gains and losses from CGT events relating to some investments may be disregarded: see Subdivision 118‑F of the Income Tax Assessment Act 1997.
(3) A venture capital management partnership is a limited partnership that:
(a) is a general partner of one or more of the following:
(i) one or more VCLPs;
(ia) one or more ESVCLPs;
(ii) one or more AFOFs; and
(b) only carries on activities that are related to being such a general partner.
A limited partnership ceases to be a venture capital management partnership if it ceases to meet the requirements of paragraphs (a) and (b).
Note: In this Act, the term “venture capital management partnership” is usually abbreviated to “VCMP”.
(4) The place of residence of a VCMP is the place at which the partnership has its central management and control.
(5) A limited partnership that is a foreign hybrid limited partnership in relation to a year of income because of subsection 830‑10(1) of the Income Tax Assessment Act 1997 is not a corporate limited partnership in relation to the year of income.
Note: As result, both the normal partnership provisions and special provisions relating to foreign hybrid limited partnerships will apply to the entity.
(6) If, for the purpose of applying this Act and the Income Tax Assessment Act 1997 in relation to a partner’s interest in a limited partnership, the partnership is a foreign hybrid limited partnership in relation to a year of income because of subsection 830‑10(2) of that Act, the partnership is not a corporate limited partnership in relation to the partner’s interest in relation to the year of income.
Note: As result, both the normal partnership provisions and special provisions relating to foreign hybrid limited partnerships will apply to the entity, but only in relation to the partner’s interest.
94E Continuity of business test
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.
94F Change in composition of limited partnership—election that partnership not be treated as an eligible limited partnership
An election referred to in paragraph 94D(1)(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.
94G Continuity of ownership test
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
94H Corporate tax modifications applicable to corporate limited partnerships
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.
94J Company includes corporate limited partnership
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 and other than Division 355 of the Income Tax Assessment Act 1997) to a company or to a body corporate includes a reference to the partnership.
94K Partnership does not include corporate limited partnership
A reference in the income tax law to a partnership does not include a reference to the partnership.