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HG 11: Limitation on deductions by partners in limited partnerships
or “Limited partners face restrictions on how much they can deduct from their income”
You could also call this:

“Partners in limited partnerships can carry forward unused deductions to future years”

If you are a partner in a limited partnership and you can’t claim a deduction in one year because of section HG 11, you can try to claim it the next year. This is called carrying forward the deduction.

You can claim the deduction in the next year unless the limited partnership stops being a limited partnership, or you stop being a partner.

If you stop being a partner and can’t claim the deduction, you can claim it in the first year you become a partner again.

When you try to claim the carried-forward deduction, section HG 11 still applies. This means there might still be limits on how much you can claim.

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Next up: HL 1: Intended effect on portfolio tax rate entities and investors

or “Former rules about portfolio tax rate entities and investors no longer apply”
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Part H Taxation of certain entities
Joint venturers, partners, and partnerships

HG 12Limitation on deductions by partners in limited partnerships: carry-forward

  1. This section applies when, for an income year, a partner is denied a deduction under section HG 11.

  2. The partner is allowed a deduction, for an amount for which the partner is denied a deduction under section HG 11, for the income year (the later income year) after the one for which it is denied under section HG 11, unless—

  3. the limited partnership ceases to be a limited partnership in the later year:
    1. the partner ceases to be a partner in the later year

      1. If a person would have been allowed a deduction but for the application of subsection (2)(b) for the later year, they are allowed a deduction for the amount for the first income year after the later year in which they resume being a partner in the limited partnership.

      2. The deduction allowed under this section is subject to section HG 11, to the extent to which that section applies to the deduction and the relevant partner.

      Notes
      • Section HG 12: inserted, on , by section 19(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
      • Section HG 12(2): amended (with effect on 1 April 2008), on , by section 82(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
      • Section HG 12(2B) heading: inserted (with effect on 1 April 2008), on , by section 82(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
      • Section HG 12(2B): inserted (with effect on 1 April 2008), on , by section 82(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).