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Partnership Tax Returns

When starting a business you can choose to work with others. You and your business partners can set yourselves in a partnership business structure. This is a cost effective business structure with minimal setup and ongoing costs to maintain. It allows the business income to be shared evenly by the partners involved. Each partner needs to have their own Tax File Number (TFN) and Australian Business Number (ABN) and there should be an agreement between the partners to form the partnership. This agreement should be a written agreement to avoid any misunderstandings in the future.

It is important to remember that each partner in the business is also responsible for and debts or other liabilities taken on by the partnership and partners share in both the profit and liabilities of the business. Each partner is responsible for the actions of the other partners and this can have legal consequences if things go wrong.

A partnership is not in itself a taxable entity but the taxable income of the partnership is passed on to all of the partners in the business and the partners are liable to pay tax on their share of the income. A tax return needs to be submitted for the partnership which details the operation of the partnership and this then allows the partners to prepare their own tax returns inclusive of any deductions which are not claimable under the partnership and must be claimed on each individual tax return. Partnerships are also liable to register for Goods and Services Tax GST if their turnover is greater than $75,000 per annum and if registered for GST Business Activity Statements (BAS) will need to be prepared an lodged with the ATO. Wages paid by the partnership to employees will need to have TAX withheld and superannuation requirements will also need to be met.

QTAX can help you form your partnership properly and meet all of your partnership and individual taxation requirements, we also can assist with bookkeeping and BAS preparation.