THE FEDERAL GOVERNMENT will ensure UK-based limited liability partnerships (LLPs) operating in Australia will be treated as such for tax purposes.
The Minister for Revenue and Assistant Treasurer, Peter Dutton, last week said the Government would make regulations that ensure UK LLPs are covered by the “foreign hybrid laws”.
“I have been advised that UK limited liability partnerships do not currently fall within the foreign hybrid rules. The Government does not consider this is an appropriate outcome,” Dutton said in a statement.
The hybrid laws were enacted in 2004 to ensure Australia didn’t tax a “foreign hybrid entity” as if it were a company, while its home jurisdiction treated it as a “look-through” entity such as a partnership. However, UK LLPs must also be “incorporated”, which meant they still had to be treated as a company in Australia.
Dutton said the Government will conduct “targeted consultations” on the design of the new regulations.
A survey conducted late last year by UK publication Legal Week found 84 per cent of the Top 50 UK law firms had either converted or were considering changing to an LLP.
LLPs were allowed for the first time in the UK under the Limited Liability Partnership Act 2000.
According to the Law Society of England and Wales, despite the name, an LLP is not a partnership, but a corporate body with “members”. Although it is a body corporate, an LLP is also not a company, and does not have shares or shareholders or directors.
Like this story? Read more: