Last Wednesday, the Commissioner released a draft “Questions We’ve Been Asked” (QWBA) relating to contributing assets to a partnership.

The question is whether this contribution represents a full sale of the asset by the partner or only a sale of the part of the asset they will not retain through their share of the partnership.

This can be an important question for example where the partner held the asset, say a piece of land, on revenue account. The answer will effectively determine whether tax is payable on the full gain on sale or just a part of it.

The draft conclusion reached by the Commissioner is that this represents a full sale. Conceptually this is as while a partner has a share of partnership assets this is not a specific asset or portion of a specific asset. By suggesting a partial sale, without further details, this would infer the partner retains the specific portion not sold while the other partners gain only the portion sold.

The document is only a draft and is subject to change. Comments can be made on the draft until 27 September 2017.