Partnerships
15.63. The view was expressed in paragraph 15.43 that Division 5 applies only to income with an Australian source. The
manner of taxing an Australian resident partner on partnership income with a foreign source must depend on other
provisions of the Act. It is at least arguable that there is no derivation of such income by a partner until the
partnership account has in fact been taken and the amount of his entitlement determined. Even then derivation might be
doubted when the partner does not have control and disposal of the amount to which he is entitled. In the Committee's
view Division 5 should be extended so that the calculation of net income is made in relation
― 221 ―
to income
from all sources. It will be necessary expressly to limit the net income taxable in the hands of a non-resident
partner so that it includes only Australian-source income. As in the case of a trust, there will be a question, in
this regard, whether the partners should be free to determine, by an appropriation in the partnership accounts, what
is the source of a partner's income. Where a partner is an Australian resident, the question will also bear on the
entitlement to exemption or tax credit by way of double taxation relief.