Last week we turned to consider s 106-5 of the ITAA 1997 and the question of what CGT event occurs when a partner contributes an asset to a partnership without transferring legal title, and how the resulting gain or loss is attributed between the partners. Contribution of an asset to a partnership under the Barwick model in Harvey, where legal title remains with the contributing partner, is properly characterised as a CGT event D1, not a CGT event A1, and the entirety of any later gain on the contributed asset is attributed to the contributing partner under s 106-5.
This session continues last week’s discussion on Harvey v Harvey and s 106-5. We will discuss the two competing models of partnership in Harvey v Harvey and how s 106-5 applies in those circumstances and the issues arising there.
Please see below links to case materials which are assumed reading to participate in the discussion:
- Harvey v Harvey (1970) 120 CLR 529, with particular attention to the reasons of Barwick CJ at 544–552 (partnership business, improvements, and property characterisation), and the majority reasons of Menzies J at 553–562 and Walsh J at 562–568 (recoupment of expenditure, no proprietary interest of the partnership in the land or its improvements)
- s 106-5 ITAA 1997 (CGT events relating to a partnership or its CGT assets – gains and losses made by partners individually, allocated by agreement or partnership law), including both worked examples
- s 104-35 ITAA 1997 (CGT event D1), particularly the s 104-35(5)(b) exclusion (right requires you to do something that is itself another CGT event happening to you)
- s 104-25 ITAA 1997 (CGT event C2 – cancellation, surrender and similar endings)
Discussion led by Adrian Cartland.