Income Tax Act 2007 section 809FZA

Overview

Section 809FZA provides an overview of the rules in Chapter 5F that determine when carried interest received by an individual from an investment scheme is treated as "income-based carried interest" and therefore subject to income tax rather than capital gains tax.

• The chapter sets out how to determine whether carried interest arising to an individual from an investment scheme qualifies as "income-based carried interest", primarily by reference to the average holding period of the scheme's investments
• Specific rules apply to direct lending funds, and there is a conditional exemption from income tax for certain carried interest, with supplementary and interpretative provisions also included
• The classification of carried interest as income-based is relevant to the treatment of disguised investment management fees under Chapter 5E
• Nothing in the chapter affects the tax position of the investment scheme itself or its external investors — it applies only to the individual receiving the carried interest