Deputy Commissioner of Taxation v McGuire
Document type: Decision Impact Statement
Venue: Supreme Court (2011/136834)
Judgment date: 11 March 2013
Date published: 10 May 2013

Summary of decision:
Outlines the ATO response to this case which concerns the application of s 60 of the Partnership Act 1892 (NSW) to taxation liabilities of a partnership imposed on limited partners.

Overview of facts:
The taxpayers were limited partners in a limited partnership. The partnership had an RBA deficit debt of $354,246.04, and this liability was imposed jointly and severally on the partners under s 444-30 of Schedule 1 to the Taxation Administration Act 1953 (TAA). The taxpayers contended that, under the terms of the partnership deed and the Partnership Act 1892 (State Act), they were not liable for the amount of the debt. | The deed stipulated that the taxpayers were limited partners with a liability limit of $5. Subsection 60(1) the State Act provides that the liability of a limited partner to contribute to the liabilities of the limited partnership is not to exceed the amount shown in the Register as the extent to which the limited partner is liable to contribute. The $5 limit appeared in the Register. | At issue was whether s 60(1) limited the tax liability arising under s 444-30 of the TAA, and whether there was inconsistency between the State Act and s 444-30 of TAA for the purposes of s 109 of the Constitution. | Issues decided by the court/Tribunal | The Court held that s 60(1) of the State Act did not apply to the liability in these proceedings. It found that s 60(1) applies to liabilities incurred by the general partner of the partnership as agent of the partnership. Section 444-30, on the other hand, imposes liabilities directly on the partners. Because of the Court's finding on s60(1), it did not deal with the inconsistency question.

Issues decided:
The Court held that s 60(1) of the State Act did not apply to the liability in these proceedings. It found that s 60(1) applies to liabilities incurred by the general partner of the partnership as agent of the partnership. Section 444-30, on the other hand, imposes liabilities directly on the partners. Because of the Court's finding on s60(1), it did not deal with the inconsistency question.

ATO view of decision:
The decision is consistent with the Commissioner's submissions to the Court.

Administrative treatment:
None. | Implications for ATO precedential documents (Public Rulings & Determinations etc) | None. | Implications for Law Administration Practice Statements | None.

Legislative references: Taxation Administration Act 1953 444-30 Partnership Act 1892 60(1)