Federal Commissioner of Taxation v. Resource Capital Fund III LP

Holding

An Australian partnership of nonresident partners was treated as fiscally transparent under the U.S.-Australia tax treaty, with consequences for source-country taxation of capital gains.

Facts

Resource Capital Fund III LP, a Cayman limited partnership with US-resident partners, realized a gain on disposal of mining-company shares.

Reasoning

The court examined the partnership-transparency treatment under the US-Australia treaty and Australian domestic law. The decision is leading authority on inbound private-equity structures into Australia.