Private ruling: Foreign hybrid limited partnership election
Date of advice: 11 November 2025
Published: 5 January 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Commissioner grant an extension of time, pursuant to paragraph 830-10(5)(b) of the Income Tax Assessment Act 1997 (ITAA 1997), to make the election to treat the Partnership interest in the Foreign Limited Partnership as an interest in a 'foreign hybrid limited partnership' for the income year ended 30 June 20YY? | A1: Yes.

Relevant facts and circumstances: Xxx Xxx (Taxpayer) is an Australian tax resident and a partner in Foreign Limited Partnership (FLP or Partnership). The conditions in section 830-10 of the ITAA 1997 are met, such that the Taxpayer is able to make the election in paragraph 830-10(2)(b) of the ITAA 1997 in relation to the treatment of their interest in FLP, subject to the Commissioner granting an extension of time under paragraph 830-10(5)(b) of the ITAA 1997. The Taxpayer made an election, pursuant to paragraph 830-10(2)(b) of the ITAA 1997, for the year ended 30 June 2024 to treat their interest in the Partnership as an interest in a Foreign Hybrid Limited Partnership (FHLP). Reasons for the late election The Taxpayer engaged the services of a Registered Tax Agent (Agent) to prepare the 20YY Income Tax Return (ITR). The Agent was unfamiliar with the rules in relation to overseas partnerships and the ability to make an election under paragraph 830-10(2)(b) of the ITAA 1997 and advised the Taxpayer to lodge the 20YY ITR which did not include an election under paragraph 830-10(2)(b) of the ITAA 1997. The structure and classification of the Partnership raised complex legal and tax interpretation issues, and the need for the election only became evident when a new tax agent, reviewed the CGT implications of the 20YY distribution from the Partnership. The Taxpayer has acted in good faith in complying with their tax obligations. Making a foreign hybrid election enables the Taxpayer to treat the income and gains arising from the Partnership under the rules in Div 5 Pt III of the ITAA 1936. The 20YY ITR has been prepared on this basis. There is no tax avoidance or evasion involved in the request for the extension of time to make the election under paragraph 830-10(2)(b) of the ITAA 1997. The election under paragraph 830-10(2)(b) of the ITAA 1997 will be made within the assessment period of review for the income year ended 30 June 20YY.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 830-10(1) | Income Tax Assessment Act 1997 subsection 830-10(1)(a) | Income Tax Assessment Act 1997 subsection 830-10(1)(b) | Income Tax Assessment Act 1997 subsection 830-10(1)(c) | Income Tax Assessment Act 1997 subsection 830-10(1)(d) | Income Tax Assessment Act 1997 subsection 830-10(1)(e) | Income Tax Assessment Act 1997 subsection 830-10(2) | Income Tax Assessment Act 1997 paragraph 830-10(2)(b) | Income Tax Assessment Act 1997 subsection 830-10(4) | Income Tax Assessment Act 1997 subsection 830-10(5) | Income Tax Assessment Act 1936 subsection 94D(5) | Income Tax Assessment Act 1936 subsection 94D(6) | Income Tax Assessment Act 1936 Part XI

Reasons for decision: Summary: The Commissioner will allow further time to make the election in subsection 830-10(2) of the ITAA 1997 under paragraph 830-10(2)(b) of the ITAA 1997. | Detailed Reasoning - Foreign hybrid limited partnership - subsection 830-10(1) of the ITAA 1997: Subsection 830-10(1) of the ITAA 1997 states that a limited partnership is a 'foreign hybrid limited partnership' (FHLP), in relation to an income year, subject to subsection 830-10(2) of the ITAA 1997, if: a) it was formed in a foreign country; and b) foreign income tax...is imposed under the law of the foreign country on the partners, not the limited partnership, in respect of the income or profits of the partnership for the income year; and c) at no time during the income year is the limited partnership, for the purposes of a law of any foreign country that imposes foreign income tax...on entities because they are residents of the foreign country, a resident of that country; and d) disregarding subsection 94D(5) of the Income Tax Assessment Act 1936 , at no time during the income year is it an Australian resident; and e) disregarding that subsection, in relation to the same income year of another taxpayer: I. the limited partnership is a CFC at the end of a statutory accounting period that ends in the income year; and II. at the end of the statutory accounting period, the taxpayer is an attributable taxpayer in relation to the CFC with an attribution percentage greater than nil. In the event that limited partnership does not meet the requirements to be a foreign hybrid limited partnership, a partner may be able to make an election pursuant to paragraph 830-10(2)(b) of the ITAA 1997 to treat their interest in the partnership as an interest in a foreign hybrid limited partnership. | Detailed Reasoning - Election under paragraph 830-10(2)(b) of the ITAA 1997: Subsection 830-10(4) provides that an election can only be made under paragraph 830-10(2)(b) of the ITAA 1997 if: a) disregarding subsection 94D(6) of the Income Tax Assessment Act 1936: I. at the end of the income year in which the election is made, the partner has an interest in a FIF (within the meaning of former Part XI of that Act) that is a *corporate limited partnership; and II. the interest consists of a *share in the FIF; and b) the limited partnership satisfies paragraphs (1)(a) to (d) in relation to the income year in which the election is made. The facts provide that the Taxpayer is able to make the election for the income year ended 30 June 20YY for the Taxpayer's interest in FLP. It follows that the limited partnership is not a hybrid limited partnership for the income year under the definition set out in subsection 830-10(1) of the ITAA 1997. However, it does also mean that all the conditions in subsection 830-10(4) of the ITAA 1997 that are required to be met to be able make the election under paragraph 830-10(2)(b) of the ITAA 1997 for the income year ending 30 June 20YY are satisfied. The election under paragraph 830-10(2)(b) of the ITAA 1997 must be made on or before the day on which Taxpayer lodges the income tax return for the 20YY income year or within a further time allowed by the Commissioner (subsection 830-10(5) of the ITAA 1997). The Taxpayer has lodged the return for the income year ended 30 June 20YY without having made the election under paragraph 830-10(2)(b) of the ITAA 1997. However, as: • the Tax Agent was unfamiliar with the rules in relation to overseas partnerships and the availability of the election under paragraph 830-10(2)(b) of the ITAA 1997 • the structure and classification of the FLP raised complex legal and tax interpretation issues, and the need for the election only became evident when a new tax agent reviewed the CGT implications of the 2024 distribution from the FLP • the Taxpayer has acted in good faith in complying with their tax obligations, and • there is no tax avoidance or evasion involved in the request for the extension of time to make the election under paragraph 830-10(2)(b) of the ITAA 1997; and • the election under paragraph 830-10(2)(b) of the ITAA 1997 will be made within the assessment period of review for the income year ended 30 June 20YY the Commissioner will allow until 30 June 2026 for Taxpayer to make the election under paragraph 830-10(2)(b) of the ITAA 1997 for the income year ended 30 June 20YY.

Does IVA apply to this private ruling?: Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement. | If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax. | We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part. | If you want us to rule on whether Part IVA applies, we will need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply. | For more information on Part IVA, go to our website ato.gov.au/gaar.