Partnership taxation can be difficult to understand, let alone lodge your tax returns for. Our partnerships taxation team break concepts down to basics to make it easier for you to understand, with the goal of optimising your returns. Contact us now to learn more!
A partnership is a group or association of people who carry on a business and distribute income or losses between themselves. For example, if you and a friend or family member decide to set up a business together, you might operate it as a partnership.
A partnership is relatively inexpensive to set up and operate. The partners share income, losses and control of the business.
A written partnership agreement is not essential for a partnership to exist, but is a good idea. A partnership agreement should outline how income or losses will be distributed to the partners and how the business will be controlled.
A partnership agreement can help prevent misunderstandings and disputes about what each partner brings to the partnership, and what they are entitled to receive from the income of the business. This is particularly important for tax purposes if the profit or losses are not distributed equally among partners.
The partners in a partnership are not employees, but the partnership might also employ other workers.
Partners are responsible for their own superannuation arrangements. However, the partnership is required to pay superannuation for its employees.
Key features in a partnership business structure:
As a partner you can’t claim deductions for money drawn from the business. Amounts you take from a partnership are not wages for tax purposes.