Private ruling: Limited partnership
Date of advice: 19 December 2025
Published: 23 February 2026
Ruling period: Income year ending 30 June 20XX
Date scheme commenced: 1 July 2025

Ruling: Q1: Is each limited partnership a company for the purpose of the Income Tax Assessment Act 1936 (ITAA 1936) and the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Will distributions from the limited partnerships to Investment Company be treated as NANE income in accordance with subsection 768-5(1) of the ITAA 1997? | A2: Yes.

Relevant facts and circumstances: This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect, and you cannot rely on it. Find out more about when you can rely on your private ruling at ato.gov.au/relyonprivateruling. Investment Company is an Australian registered company, incorporated on DD MMM 20XX. Investment Company currently has X ordinary shares on issue, all of which are owned by Holding Company which is an Australian registered company, incorporated on DD MMM 20XX. Holding Company acts as the trustee for the Family Trust. Investment Company is an Australian resident company for tax purposes. Investment Company holds ownership Interest in three international limited partnerships. Investment Company holds the following percentage beneficial ownership interests: ­ Limited Partnership 1 XX.xxxx% ­ Limited Partnership 2 XX.xxxx% ­ Limited Partnership 3 XX.xxxx% Limited Partnership 1 is a Country B Limited Partnership whose registered address is in Country C. Limited Partnership 2 is a Country C Limited Partnership whose registered address is in Country C. Limited Partnership 3 is a Country C Limited Partnership whose registered address is in Country C. Limited Partnerships 1, 2 and 3 are collectively referred to as the limited partnerships. The control and management of each limited partnership is located overseas, and none of the limited partnerships conduct any business activities within Australia. The Applicant has stated that each partnership agreement for the limited partnerships provide for one partner to be the General Partner and for the other parties to be Limited Partners. The Applicant has stated that none of the limited partnerships are registered under Part 2 of the Venture Capital Act 2002 . The Applicant has stated that all the limited partnerships were formed under the advised international legislation. The Applicant has stated that: • Limited Partnership 1 was formed on DD MMM 20XX • Limited Partnership 2 was formed on DD MMM 20XX and • Limited Partnership 3 was formed on DD MMM 20XX. Investment Company is expected to maintain the same direct participation interest in each limited partnership for all forthcoming distributions. Investment Company does not act in the capacity of trustee for any of the limited partnerships and will not receive distributions from the limited partnerships in a trustee capacity. The limited partnerships are not Part X Australian residents within the meaning of Part X of the Income Tax Assessment Act 1936 (ITAA 1936) nor are the limited partnerships considered to be Controlled Foreign Companies for the purpose of Part X of the ITAA 1936. The distributions that will be paid to Investment Company are in respect of the direct participation interest Investment Company holds in each limited partnership. The limited partnerships are not entitled to a foreign income tax deduction in relation to the distributions paid. Investment Company holds more than a 10% direct participation interest in these foreign limited partnerships governed by the laws of Country B and Country C.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 768-5 | Income Tax Assessment Act 1997 section 768-7 | Income Tax Assessment Act 1997 section 768-10 | Income Tax Assessment Act 1997 section 768-15 | Income Tax Assessment Act 1997 Division 830 | Income Tax Assessment Act 1997 section 960-115 | Income Tax Assessment Act 1997 section 960-120 | Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1936 section 94D | Income Tax Assessment Act 1936 subsection 94D(5) | Income Tax Assessment Act 1936 section 94J | Income Tax Assessment Act 1936 section 94P | Income Tax Assessment Act 1936 section 94T | Income Tax Assessment Act 1936 section 94D | Income Tax Assessment Act 1936 section 317

Reasons for decision: Summary: Broadly, a 'foreign hybrid' means an entity such as non-resident limited liability partnership, and other similar entities that are taxed in Australia as a company but taxed on a partnership basis in their country of formation. The overseas jurisdiction taxes the members on their share of the entity's income and the entity itself is not taxed. Under Division 830 if certain conditions are met, non-resident limited partnerships and other foreign hybrids are treated as partnerships and not as companies for Australian income tax purposes. Investors in these entities are treated for Australian tax purposes as having partnership interests. The non-resident limited partnerships which are discussed in this private ruling will be treated as companies for Australian tax purposes. That is, they are not foreign hybrids to which Division 830 applies. | Detailed Reasoning - Detailed reasoning: Subsection 6(1) of the ITAA 1936 provides that a limited partnership has the same meaning as defined in section 995-1. So far as relevant a limited partnership means: (a) an association of persons (other than a company) carrying on business as partners or in receipt of *ordinary income or *statutory income jointly, where the liability of at least one of those persons is limited; or (b) ... Further, subsection 6(1) of the ITAA 1936 goes on to define a corporate limited partnership by reference to section 94D therein. So far as relevant section 94D provides that a corporate limited partnership means (emphasis added): (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 ... (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. Section 94D of the ITAA 1936 therefore precludes a foreign hybrid limited partnership from being a corporate limited partnership under the ITAA 1936 (see, subsection 94D(5) of the ITAA 1936). The Applicant has stated on behalf of each limited partnership that: • they were formed in a foreign country • foreign income tax is imposed on the partner (as opposed to the various partnerships) • they are not residents of a foreign country that imposes tax upon them because they are a resident of that country • they have never been Australian tax residents, and • they are not a controlled foreign company (CFC) under section 340 of the ITAA 1936 Whilst each limited partnership will satisfy paragraphs (a) - (d), none of them will be a CFC as defined by paragraphs (a) - (c) of section 340 of the ITAA 1936. Consequently, the exclusion provided in subsection 94D(5) of the ITAA 1936 will not operate, and each of the limited partnerships should be characterised as a corporate limited partnership for Australian taxation purposes and therefore will be characterised as a company for Australian taxation law purposes (see, Note 2 of the definition of company in section 995-1). | Detailed Reasoning - The limited partnerships - application of section 830-10: Section 830-10 details the requirements to establish a limited partnership as a foreign hybrid limited partnership. Broadly, the requirements (or criteria) needed to be established are: • Criteria 1: The limited partnerships must be formed in a foreign country (paragraph 830-10(1)(a)). This criterion is satisfied. • Criteria 2 Foreign income tax must be imposed on the partners (not the limited partnership) (paragraph 830-10(1)(b)). This criterion is satisfied. • Criteria 3 The limited partnerships must be flow-through vehicles in the foreign jurisdictions (paragraph 830-10(1)(c)). This criterion is satisfied. • Criteria 4 The limited partnerships must not be Australian tax residents (paragraph 830-10(1)(d)). This criterion is satisfied. • Criteria 5 The limited partnerships must not be directly taxed in Australia (paragraph 830-10(1)(e)). This criterion is satisfied. Further, the Applicant has advised that has not made an election in accordance with 830-10(2) to treat its interests in any of the Foreign Companies as interests in a foreign hybrid limited partnership. | Detailed Reasoning - Conclusion: Based on the above analysis, each limited partnership should qualify to be treated as a corporate limited partnership for the purpose of Division 5A of the ITAA 1936. On this basis, each will be treated as a company (a foreign company) for the purpose of applying Australia's income tax provisions. | Detailed Reasoning - Question 2: Will distributions from the limited partnerships to Investment Company be treated as NANE income in accordance with subsection 768-5(1)? Under Subdivision 768-A, where an Australian corporate tax entity receives a foreign equity distribution from a foreign company, either directly or indirectly through one or more interposed trusts or partnerships, and the Australian corporate tax entity holds a participation interest of at least 10% in the foreign company, the distribution by the foreign company is NANE income for the Australian corporate tax entity. Section 768-5(1) states: A foreign equity distribution is not assessable income, and is not exempt income, of the entity to which it is made if: a) The entity is an Australian resident and a corporate tax entity; and b) At the time the distribution is made, the entity satisfies the participation test in relation to the company that made the distribution; and c) The entity: i) does not receive the distribution in the capacity of a trustee; or ii) receives the distribution in the capacity of a trustee of a public trading trust; and d) The distribution is not one to which gives rise to an entitlement to a foreign income tax deduction. | Detailed Reasoning - Foreign equity distribution: Section 768-10 defines a 'foreign equity distribution' as: A distribution or a non-share dividend made by a company that is not a Part X Australian resident (within the meaning of Part X of the Income Tax Assessment Act 1936) in respect of an equity interest in the company. Item 2 [corporate limited partnership] of the table in subsection 960-120(1) states that: 'a distribution' made by the partnership, whether in money or in other property, to a partner in the partnership, other than a distribution, or so much of a distribution, as is attributable to profits or gains arising during the year in relation to which the partnership was not a corporate limited partnership. 'Part X Australian resident' is defined in section 317 of the ITAA 1936 as a resident within the meaning of section 6 of the ITAA 1936 but excluding an entity that is a dual resident of Australia together with a foreign country with which Australia has a Double Tax Agreement (DTA), where under the provisions of the DTA, the entity is treated solely as a resident of that foreign country. Given that the limited partnerships were formed outside of Australia, have their central management and control exercised overseas, do not conduct any business activities within Australia and are intended to remain offshore entities, the limited partnerships should not be considered residents of Australia for tax purposes. On this basis, • each limited partnership will not be treated as a Part X Australian resident • each distribution from each limited partnership qualifies to be treated as a distribution for Australian income tax purposes • each distribution made by each limited partnership will be made in respect of an equity interest in each limited partnership, and • each limited partnership will always be treated as a corporate limited partnership. Therefore, each payment made by each limited partnership should qualify to be treated as a foreign equity distribution for the purposes of subsection 768-5(1). | Detailed Reasoning - The entity is an Australian resident and a corporate tax entity: The term 'Australian resident' is defined under section 995-1(1) as 'A person who is a resident of Australia for the purposes of the ITAA 1936.' Subsection 6(1) of the ITAA 1936 states that a resident of Australia includes a company which is incorporated in Australia. Under section 960-115, an entity is a 'corporate tax entity' at a particular time if the entity is a company at that time. Investment Company is a proprietary company limited by shares and was incorporated in Australia. Therefore, Investment Company is an Australian resident and a corporate tax entity. The entity satisfies the participation test in section 768-15 in relation to the company that made the distribution at the time the distribution is made Section 768-15 provides that an entity satisfies the participation test in relation to another entity where the sum of the following is at least 10%: (a) the direct participation interest the entity would have in the other entity if rights on winding- up were disregarded; (b) the indirect participation interest the entity would have in the other entity if: i. rights on winding-up were disregarded; and ii. section 960-185 only applied to intermediate entities that are not corporate tax entities. The definition of 'direct participation interest' in a company in Item 1 of subsection 960-190(1) directs you to the definition of 'direct control interest' under subsection 350(1) of the ITAA 1936, which outlines: (1) An entity holds a direct control interest in a company at a particular time equal to the percentage that the entity holds, or is entitled to acquire, at that time of: a. The total paid up share capital of the company; or b. The total rights of shareholders to vote, or participate in any decision - making, concerning any of the following: i. The making of distributions of capital or profits of the company to its shareholders; ii. The constituent document of the company; iii. Any variation of the share capital of the company; or c. The total rights to distributions of capital or profits of the company to its shareholders on winding-up; or d. The total rights to distributions of capital or profits of the company to its shareholders, otherwise than on winding-up; or if different percentages are applicable under the preceding paragraphs, the greater or greatest of those percentages [applies]. Further, Taxation Ruling (TR) 2017/3 Income tax: distributions from foreign companies - meaning of 'at the time the distribution is made' when applying the participation test, states at paragraph 10: For the purposes of section 768-5 the Commissioner considers that an entity will satisfy the participation test 'at the time the distribution is made' by the foreign company if the entity is the registered holder of at least a 10% participation interest in that company at the commencement of the day that the distribution is made. Investment Company holds the following direct ownership interests in the limited partnerships listed below. Table 1: Director ownership interest | Detailed Reasoning - Interest (%): Limited Partnership 1 XX.xxxxx Limited Partnership 2 XX.xxxxx Limited Partnership 3 XX.xxxxx Further, these direct ownership interests represent Investment Company's total rights to distributions of capital and profits from the limited partnerships otherwise than on winding up in accordance with subsection 350(4) of the ITAA 1936. Investment Company is expected to maintain the same ownership interest for all future dividend payments. On this basis Investment Company will satisfy the participation test, as it is expected to be the registered holder of at least a 10% direct participation interest in each limited partnership as of the commencement of the day on which the relevant distributions are expected to be made. | Detailed Reasoning - The entity did not receive the distribution in the capacity of a trustee: Investment Company will not derive distributions from the limited partnerships in the capacity of a trustee. | Detailed Reasoning - The distribution is not one to which section 768-7 (which is about foreign income tax deductions) applies: Section 768-7(1) states that this section applies to a foreign equity distribution if: (a) All or part of the distribution gives rise to a foreign income tax deduction; and (b) The exception in subsection (2) does not apply to the distribution. Section 832-120 defines a foreign income tax deduction as: (1) An amount of a loss or outgoing is a foreign income tax deduction in a foreign country in a foreign tax period to which an entity is entitled, if the entity is entitled to deduct the amount in working out its tax base for the foreign tax period under a law of the foreign country dealing with foreign income tax. The Applicant has stated that no part of the distributions made by the limited partnerships will give rise to a foreign income tax deduction. | Detailed Reasoning - Conclusion: As the conditions in subsection 768-5(1) have been satisfied, the distributions that will be paid to Investment Company by the limited partnerships are foreign equity distributions that should qualify to be treated as NANE income in accordance with Subdivision 768-A.

Reasons for decision: All legislative references are to the Income Tax Assessment Act 1997 , unless indicated otherwise.