Resource Capital Fund IV LP: what's all the fuss about? Foreign partnerships and liability to Australian tax
The Federal Court has concluded that the profit made on disposal of shares in an Australian mining company by a private equity fund, formed as a Cayman Islands Limited Partnership, was not subject to Australian tax. It found the shares in the Australian company were not taxable Australian property for capital gains tax purposes and the partners in the Limited Partnership who were US residents were entitled to relief from taxation under the double tax agreement between Australia and the US.
When the judgment is reduced to these key propositions, it might be surprising that it has garnered so much commentary, some of which arguably reflects misunderstanding. That said, there are some conclusions in the judgment with potential implications for the conduct and management of investments by foreign residents in Australian companies that call for further reflection.