Revenue Note for Guidance
The Finance Act 2013 provided for the tax treatment of an investment limited partnership (ILP), authorised under the Investment Limited Partnerships Act 1994 on or after 13 February 2013, by removing such ILPs from the definition of investment undertaking in section 739B and inserting this new section. It distinguishes an ILP from other collective investment funds and allows an ILP to be explicitly treated as a tax-transparent entity. Consequential amendments were required in sections 246(1), 734(1)(a), 739B(1) and 739D(6).
(1) An investment limited partnership (ILP) is an investment limited partnership as provided for in the Investment Limited Partnerships Act 1994.
The section provides a definition of “relevant losses”. The term means, for the purposes of the section, any losses sustained by the ILP which would constitute an allowable loss in the hands of a person resident in the State for the purposes of a charge to capital gains tax or income tax.
The definitions of “relevant gains”, “relevant income”, “relevant payment”, apply to an ILP as they apply to an investment undertaking in section 739B as if references to “unit” and “unit holder” were references to “partnership interest” and “partner” respectively and with any other required modifications.
(2) An ILP is not chargeable to tax and the income, payments, gains and losses arising to an ILP are treated as arising directly to the partners in the partnership, in proportion to their interests in the partnership. This is the principle of tax-transparency. Where in any period the amount of income or gains which are taken as arising or accruing to the partners of the ILP is less than the total amount arising or accruing to the ILP for that period then the difference will be treated as arising or accruing to the general partner or apportioned between the general partners in cases where there is more than one general partner.
(3) An ILP must make an annual return to Revenue, by 28 February in the year following the year of assessment, providing information regarding the relevant income, gains and losses of the ILP and specified details in relation to the partners holders in the ILP.
(4) An ILP is exempt from deposit interest retention tax (DIRT) as is the case with other investment undertakings.
Relevant Date: Finance Act 2021