Australia

Details

  • Service: Tax, Corporate Tax
  • Type: Regulatory update
  • Date: 19/06/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Praneel Nand

Praneel Nand
Director, Tax

+61 3 9288 6673

pnand@kpmg.com.au

Joint venture arrangements 

by Praneel Nand, Corporate Tax Specialist

Due to various commercial objectives, including capital funding and sharing of risks and expertise, un-incorporated joint ventures are a common arrangement between mining entities. Due to my involvement with mining clients, I often get questions from colleagues on tax issues associated with unincorporated joint venture arrangements which are not limited to the mining sector.

The following are some of the issues that need to be considered from a tax perspective:

 

  • could the joint venture constitute a 'partnership' for tax purposes?
  • how are the contributions to the joint venture operations treated?
  • what are the tax depreciation and/or project pool deduction entitlements for each joint venture party?
  • where the joint venture operations cease, are there balancing adjustment entitlements, and if yes, when are the deductions available?
  • what records do joint venture parties need to maintain to substantiate its tax return positions, particularly where the fixed asset registers and other records may be maintained by the operator?
  • where the joint venture assets and operations are offshore, what are the additional/relevant tax issues that need to be considered?

 

It is imperative that the above issues are considered and factored into the relevant joint venture agreements to ensure that the commercial objectives are satisfied. Some minor issues such as holding joint back accounts could have an impact on the tax outcomes.

 

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