Tax Treaty Case Law around the Globe 2019

S. 3Limited Partnerships and Treaty Benefits – Resource Capital Fund IV: Pagone J and Full Federal Court

Richard J. Vann/C. John Taylor

S. 41. Introduction

The Resource Capital group of funds is doing its best to clarify Australian domestic tax law and tax treaty treatment of private equity purchases and sales of Australian mining companies through limited partnerships (LPs). Once again their efforts have been on the receiving end of an adverse Full Federal Court decision after winning at first instance.

The five-member bench of the Full Court has made progress in rejecting some of the surprising views of the primary judge (Pagone J) and in clarifying or at least moving forward on several difficult issues of domestic tax law and tax treaties where limited partnerships (LPs) are involved. At the same time, the judgments in the Full Court leave some important issues unresolved such as the application of the Australia-United States income Tax Treaty (1982) (Australia-US tax treaty) to LPs, a workable procedure by which partners in LPs can claim treaty benefits and the treatment of downstream mining activities in applying provisions equivalent to article 13(4) of the OECD Model. As a result, forei...