PARTNERSHIP
WHAT IS PARTNERSHIP?
It is a voluntary contract between two or more persons for undertaking a lawful business and has agreed to share the profits and losses of business. Partners are jointly and severally responsible for the company’s debts and litigations
FORMATION PROCEDURE OF PARTNERSHIP BUSINESS
Formation cost of partnership business is minimum $250(Cost can be exceed if required)
- Australian Business Number is necessary to enroll
- GST registration (if applicable)
- Business name with state authority is required to register (if applicable)
- PAYG-W registration(If applicable)
- Registration for separate Tax File Number
- Partnership Agreement (If applicable)
BENEFITS
- Taxation of capital gains are done at partner’s level
- Formation of partnership business is easily manageable
- Minimum compliances are required
- Lower maintenance cost
- Income is divided between partners
- Reduction of workers compensation and superannuation
DRAWBACKS
- Assets are unprotected
- Individual partners are personally liable for business debts
- Partners in Tenants do not possess rights of survivorship
- Joint Tenant co-owners are not obliged to discard their concern separately
- Partners claiming for the deductions of superannuation contribution (as self-employed) are based on age limit. Contribution of first $3000 is 100% deductible, 75% of deductions if amount exceeds to $3000
COMPLIANCE REQUIREMENT
- It is obliged to register Australian business number
- Annually submission of tax return documents
- Registration of GST depends on business turnover
- Acknowledgement of Financial statements(Balance sheet and profit and loss)
- Registration of Tax file number
ANALYSIS
A partnership business is group of two or more persons who carry on as co-owners and share profits and losses of business. Partners are entitled in profit distribution during tax planning. Settlement of income tax can be done either at the end of the year subsequent to lodgment of Tax Return or Paid through an Income Activity Statement (IAS) during the year and an adjustment can be accomplished at the end of the year. Therefore profits of the partnership business comprise drawings during the year and the balance amount in the bank accounts at the end of the year after withdrawals. Partners are obliged to protect their assets as each partner is jointly and severally liable for the partnership debts
