§ 36A — Limited liability partnership

36A.—(1) For the purposes of this Act, where a limited liability partnership carries on a trade, business, profession or vocation —(a)

all the activities of the partnership are treated as carried on in partnership by its partners (and not by the partnership as such);

(b)

anything done by, to or in relation to the partnership for the purposes of, or in connection with, any of its activities is treated as done by, to or in relation to the partners; and

(c)

the property of the partnership is treated as held by the partners as partnership property.

(2) For the purposes, except as otherwise provided, of this Act —(a)

references to a partnership include a limited liability partnership in relation to which subsection (1) applies;

(b)

references to partners of a partnership include partners of such a limited liability partnership;

(c)

references to a company do not include such a limited liability partnership; and

(d)

references to shareholders of a company do not include partners of such a limited liability partnership.

(3) In ascertaining the income of a limited liability partnership for the purpose of section 36(1)(a), section 10D applies to income from any business of the making of investments as if the limited liability partnership is a company.

(4) For any year of assessment, the amount of relevant deductions that may be allowed to or transferred by a partner of a limited liability partnership must not exceed —(a)

in the case of a relevant deduction allowed to the partner under section 35(2), an amount equal to the amount ascertained in accordance with the formula

(b)

in the case of a relevant deduction allowed to the partner under section 37(3)(a), an amount equal to the amount ascertained in accordance with the formula

(c)

in the case of a transferred deduction transferred by the partner, an amount equal to the amount ascertained in accordance with the formula

(d)

in the case of a carry‑back deduction allowed to or transferred by the partner, an amount equal to the amount ascertained in accordance with the formula

where A

is the partner’s contributed capital in that year of assessment;

B

is the past relevant deductions already allowed to the partner;

C

is the relevant deduction allowed to the partner in that year of assessment under section 35(2);

D

is the relevant deduction allowed to the partner in that year of assessment under section 37(3)(a); and

E

is the transferred deduction transferred by the partner in that year of assessment.

(5) If, as a result of any reduction in the contributed capital of a partner of a limited liability partnership in any year of assessment, the past relevant deductions already allowed to the partner exceeds the partner’s contributed capital, the excess is deemed to be income of the partner chargeable with tax under section 10(1)(g) for that year of assessment, and an amount equal to the excess is deemed to be a loss incurred by the partner in the trade, business, profession or vocation of the limited liability partnership.

(6) Subsections (4) and (5) do not apply in the year of assessment relating to the basis period in which the partner ceases to be a partner of a limited liability partnership or in any subsequent year of assessment.

(7) For the purposes of any allowances made under section 16, 17, 18B, 18C, 19, 19A, 19B, 19C, 19D, 20 or 23, where —(a)

any person is admitted to or withdraws from a limited liability partnership as a partner thereof; and

(b)

one or more persons remain as partners of the limited liability partnership after the admission or withdrawal of that person,

the interest of that person in any property of the limited liability partnership is deemed to be —

(c)

where that person is admitted to the limited liability partnership as a partner, sold to that person by all the remaining partners; or

(d)

where that person withdraws from the limited liability partnership as a partner, sold by that person to all the remaining partners.

(8) The precedent partner of a limited liability partnership must make and deliver, together with a return of the income of the limited liability partnership under section 71 or when required by the Comptroller by written notice, a return of the contributed capital of each partner of the limited liability partnership for any year of assessment.

(9) For the purposes of this section, the Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(10) In this section —“activities of the limited liability partnership” means anything done by the limited liability partnership, whether or not in the course of carrying on a trade, business, profession or vocation;

“carry‑back deductions”, in relation to a partner of a limited liability partnership in any year of assessment, means —(a)

any deduction allowed to the partner of any allowance arising from any trade, business or profession, or any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is made against the partner’s assessable income from any other source for the immediate preceding year of assessment under section 37D(1) or any of the 3 immediate preceding years of assessment under section 37D(1A); or

(b)

any allowance arising from any trade, business or profession, or any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is transferred by the partner to a spouse under section 37E;

“contributed capital”, in relation to a partner of a limited liability partnership for any year of assessment, means the aggregate of —(a)

the amount, as at the end of the basis period for the year of assessment to be determined by the Comptroller, which the partner has contributed (in cash or in kind but not including any loan by the partner to the limited liability partnership) to the limited liability partnership as capital, and has not, directly or indirectly, drawn out or received back (whether as a distribution or a loan from the limited liability partnership or otherwise); and

(b)

the amount, as at the end of the basis period for the year of assessment to be determined by the Comptroller, of any profits or gains of the trade, business, profession or vocation from any past year of assessment to which the partner is entitled as a partner of the limited liability partnership but which the partner has not, directly or indirectly, received (whether as a distribution or a loan from the limited liability partnership or otherwise);

“past relevant deductions”, in relation to a partner of a limited liability partnership in any year of assessment, means the aggregate of any relevant deductions allowed to the partner less any amount deemed under subsection (5) to be income chargeable with tax in any year of assessment before that year of assessment;

“precedent partner” has the meaning given by section 71;

“relevant deductions”, in relation to a partner of a limited liability partnership, means —(a)

any deduction allowed to the partner under section 35(2) of any allowance arising from any trade, business or profession carried on by the limited liability partnership;

(b)

any deduction allowed to the partner under section 37(3)(a) of any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is made against the partner’s statutory income from any other source;

(c)

any transferred deduction transferred by the partner; or

(d)

any carry‑back deduction allowed to or transferred by the partner,

as the case may be;

“transferred deduction”, in relation to a partner of a limited liability partnership, means any allowance arising from any trade, business or profession, or any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is transferred by the partner to a claimant company under section 37B or to a spouse under section 37C.[39/2017; 41/2020]

—(1) For the purposes of this Act, where a limited liability partnership carries on a trade, business, profession or vocation —(a)

all the activities of the partnership are treated as carried on in partnership by its partners (and not by the partnership as such);

(b)

anything done by, to or in relation to the partnership for the purposes of, or in connection with, any of its activities is treated as done by, to or in relation to the partners; and

(c)

the property of the partnership is treated as held by the partners as partnership property.

(2) For the purposes, except as otherwise provided, of this Act —(a)

references to a partnership include a limited liability partnership in relation to which subsection (1) applies;

(b)

references to partners of a partnership include partners of such a limited liability partnership;

(c)

references to a company do not include such a limited liability partnership; and

(d)

references to shareholders of a company do not include partners of such a limited liability partnership.

(3) In ascertaining the income of a limited liability partnership for the purpose of section 36(1)(a), section 10D applies to income from any business of the making of investments as if the limited liability partnership is a company.

(4) For any year of assessment, the amount of relevant deductions that may be allowed to or transferred by a partner of a limited liability partnership must not exceed —(a)

in the case of a relevant deduction allowed to the partner under section 35(2), an amount equal to the amount ascertained in accordance with the formula

(b)

in the case of a relevant deduction allowed to the partner under section 37(3)(a), an amount equal to the amount ascertained in accordance with the formula

(c)

in the case of a transferred deduction transferred by the partner, an amount equal to the amount ascertained in accordance with the formula

(d)

in the case of a carry‑back deduction allowed to or transferred by the partner, an amount equal to the amount ascertained in accordance with the formula

where A

is the partner’s contributed capital in that year of assessment;

B

is the past relevant deductions already allowed to the partner;

C

is the relevant deduction allowed to the partner in that year of assessment under section 35(2);

D

is the relevant deduction allowed to the partner in that year of assessment under section 37(3)(a); and

E

is the transferred deduction transferred by the partner in that year of assessment.

(5) If, as a result of any reduction in the contributed capital of a partner of a limited liability partnership in any year of assessment, the past relevant deductions already allowed to the partner exceeds the partner’s contributed capital, the excess is deemed to be income of the partner chargeable with tax under section 10(1)(g) for that year of assessment, and an amount equal to the excess is deemed to be a loss incurred by the partner in the trade, business, profession or vocation of the limited liability partnership.

(6) Subsections (4) and (5) do not apply in the year of assessment relating to the basis period in which the partner ceases to be a partner of a limited liability partnership or in any subsequent year of assessment.

(7) For the purposes of any allowances made under section 16, 17, 18B, 18C, 19, 19A, 19B, 19C, 19D, 20 or 23, where —(a)

any person is admitted to or withdraws from a limited liability partnership as a partner thereof; and

(b)

one or more persons remain as partners of the limited liability partnership after the admission or withdrawal of that person,

the interest of that person in any property of the limited liability partnership is deemed to be —

(c)

where that person is admitted to the limited liability partnership as a partner, sold to that person by all the remaining partners; or

(d)

where that person withdraws from the limited liability partnership as a partner, sold by that person to all the remaining partners.

(8) The precedent partner of a limited liability partnership must make and deliver, together with a return of the income of the limited liability partnership under section 71 or when required by the Comptroller by written notice, a return of the contributed capital of each partner of the limited liability partnership for any year of assessment.

(9) For the purposes of this section, the Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(10) In this section —“activities of the limited liability partnership” means anything done by the limited liability partnership, whether or not in the course of carrying on a trade, business, profession or vocation;

“carry‑back deductions”, in relation to a partner of a limited liability partnership in any year of assessment, means —(a)

any deduction allowed to the partner of any allowance arising from any trade, business or profession, or any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is made against the partner’s assessable income from any other source for the immediate preceding year of assessment under section 37D(1) or any of the 3 immediate preceding years of assessment under section 37D(1A); or

(b)

any allowance arising from any trade, business or profession, or any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is transferred by the partner to a spouse under section 37E;

“contributed capital”, in relation to a partner of a limited liability partnership for any year of assessment, means the aggregate of —(a)

the amount, as at the end of the basis period for the year of assessment to be determined by the Comptroller, which the partner has contributed (in cash or in kind but not including any loan by the partner to the limited liability partnership) to the limited liability partnership as capital, and has not, directly or indirectly, drawn out or received back (whether as a distribution or a loan from the limited liability partnership or otherwise); and

(b)

the amount, as at the end of the basis period for the year of assessment to be determined by the Comptroller, of any profits or gains of the trade, business, profession or vocation from any past year of assessment to which the partner is entitled as a partner of the limited liability partnership but which the partner has not, directly or indirectly, received (whether as a distribution or a loan from the limited liability partnership or otherwise);

“past relevant deductions”, in relation to a partner of a limited liability partnership in any year of assessment, means the aggregate of any relevant deductions allowed to the partner less any amount deemed under subsection (5) to be income chargeable with tax in any year of assessment before that year of assessment;

“precedent partner” has the meaning given by section 71;

“relevant deductions”, in relation to a partner of a limited liability partnership, means —(a)

any deduction allowed to the partner under section 35(2) of any allowance arising from any trade, business or profession carried on by the limited liability partnership;

(b)

any deduction allowed to the partner under section 37(3)(a) of any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is made against the partner’s statutory income from any other source;

(c)

any transferred deduction transferred by the partner; or

(d)

any carry‑back deduction allowed to or transferred by the partner,

as the case may be;

“transferred deduction”, in relation to a partner of a limited liability partnership, means any allowance arising from any trade, business or profession, or any loss incurred in any trade, business, profession or vocation carried on by the limited liability partnership that is transferred by the partner to a claimant company under section 37B or to a spouse under section 37C.[39/2017; 41/2020]