D Marks – Federal Court of Australia finds that an association registered as a limited partnership was not a partnership notwithstanding that its registration was stated to be “conclusive”

A purported Australian limited partnership was not a partnership under general principles of Australian partnership law, as its purported general and limited partners were conceded to not be carrying on business in common with a view to profit. However, the association (to use a neutral label) was registered as a limited partnership, and the relevant Queensland statute stated that such registration “shall be conclusive evidence that the limited partnership to which it refers was formed on the date of registration referred to therein.”

The minority was inclined to follow a recent English decision (Bank of Beirut), which was quoted as standing for the proposition that “once the certificate has been issued the partnership must be regarded as having come into existence.”

The majority read the Queensland deeming provision as only dealing with the timing of when what otherwise is a valid partnership becomes a limited partnership, and stated that it should not be construed as creating “a new fictional category of ‘limited partnerships’ upon registration of associations which had not otherwise been partnerships.” Bank of Beirut was distinguished as dealing only with the narrow question of whether a registration of a limited partnership should be reversed.

If the minority view in this case is correct, it may suggest that in some English limited partnerships (i.e., those whose status as partnerships under English law depends on their registration) will not be accepted as partnerships for Canadian taxation purposes.

Neal Armstrong. Summary of D Marks Partnership by its General Partner Quintaste Pty Ltd v Commissioner of Taxation, [2016] FCAFC 86 under s. 96.