ATO Interpretative Decision

ATO ID 2004/909

Income Tax

Entity classification of an investment fund created and operating under the German Investment Company Act
FOI status: may be released

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Issue

Can an investment fund created and operating under German legislation, (the German Investment Company Act), be regarded as a company under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for taxation law purposes in Australia?

Decision

Yes. An investment fund created and operating under the German Investment Company Act, would be regarded as a company under section 995-1 of the ITAA 1997 for taxation law purposes in Australia

Facts

An investment fund created under German law, (the German Investment Company Act), proposes to undertake income producing activities in Australia.

The fund will be a non resident of Australia and is prohibited from offering participation in the fund outside of Germany. The fund will not have a permanent establishment in Australia and its investors are non residents of Australia.

The investment fund is exempt from income tax in Germany and is treated as a flow through entity.

Reasons for Decision

A company for Australian tax purposes is defined in section 995-1 of the ITAA 1997. Section 995-1 defines a company to mean:

(a): a body corporate; or
(b): any other unincorporated association or body of persons;

but does not include a partnership or a non-entity joint venture.

The definition of a company is sufficiently broad to encompass an entity incorporated and operating under the provisions of the German Investment Company Act. The definition could include entities that would not normally be considered to be a company such as unincorporated bodies and associations. The fund comes within the scope and ambit of the definition.

Therefore, an investment fund created and operating under the German Investment Company Act would be regarded as a company under section 995-1 of the ITAA 1997.

Date of decision: 4 November 2004

Year of income: Year ended 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
section 995-1

Keywords
Double tax agreements
Incorporation

Siebel/TDMS Reference Number: 3999854

Business Line: Public Groups and International

Date of publication: 19 November 2004

ISSN: 1445-2782

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