Capital Gains Tax (CGT) International tax & business Resource taxes

Issues arising from the resource capital fund case

Source: The Tax Specialist Journal Article

Published Date: 1 Feb 2015


The Full Federal Court decision in Resource Capital Fund III LP v FCT in 2014 concerned a foreign limited partnership which made capital gains from selling a shareholding in an Australian mining company. The court held that the capital gains were properly taxable in Australia. This case is relevant to the taxation of cross-border investments through hybrid entities, and investments by non-residents into Australia, particularly in the resources and property sectors. It also has important implications for the interpretation of Australia's tax treaties where Australia and another contracting state adopt different approaches to taxing a hybrid entity.

This article examines the issues arising from the RCF case. It also considers the potential implications of the events that have occurred in the aftermath of the case, including actions currently being undertaken as part of the OECD's base erosion and profit shifting project, as well as the Australian Government's legislative response to this case.

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Capital Gains Tax (CGT) International tax & business Resource taxes 2015

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