Australian Taxation: Assessable Income of Partnership Business, Depreciating Assets, Repairs and Maintenance, Loss in Partnership

Australian Taxation
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Table of Contents
Question 1..................................................................................................................................3
Assessable Income of Partnership Business..........................................................................3
Depreciating the assets...........................................................................................................3
Repairs and Maintenance.......................................................................................................4
Loss in Partnership.................................................................................................................4
Question 2..................................................................................................................................8
References................................................................................................................................10
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QUESTION 1
Assessable Income of Partnership Business
Division 5 of Pt of III ITAA deals with the principles concerning partnership taxation. These
are applicable to all types of partnership exclusive of limited corporate partnership. It is
stated by Morse and Deutsch (2015), that, the main purpose of this division is to inflict the
tax on the partners rather than partnership which is obliged to be the individual taxpayer.
Further, it is the responsibility of partners to report their separate interest for each amount .
Section 92 (1) asserts assessable income of a partner must comprise:
a) Individual interest of a partner in the net profit of partnership of year of income as the
same is attributable to a phase when the partner was an occupant.
b) The interest of a partner in net income of partnership of the year of income as is
referable to a time when the partner was non- resident.
Further, section 2 if the partnership experiences a loss, in that case, the partner is enabled to
deduct its separate interest in the loss. Blakelock and King (2017), asserts that it also
facilitates the partner who is not a resident with so much of loss of partnership as is
attributable to Australian sources.
In accordance with the Australian Taxation Office (ATO), while estimating the assessable
income, the company is obliged to calculate gross profit or profits from the ordinary course of
business. Apart from this, Chardon, Freudenberg and Brimble (2016), specifies that there are
other payments also which are not the part of regular activities of firm but is necessary to be
included in the assessable income. Furthermore, as per assertions of Wicker (2018), the
principal amount of repayment of loan cannot be deducted from the tax.
Depreciating the assets
According to Raftery (2017), the business cannot reduce the spending on capital assets
instantly rather the cost can be claimed for the same, representing the value of assets that is
fall in value. Depreciating assets refer to those assets which have a restricted effective life,
and it could be anticipated that with the utilisation of assets there will be a fall in value. There
are some assets which are not depreciating assets, and they are land, trading stock as well as
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