Taxes on the income of a partnership

Revenue Law

TABLE OF CONTENTS
Part A.........................................................................................................................................3
(i) Assessable Income of Partnership.....................................................................................3
(ii) Allowable deductions for Partnership..............................................................................4
Part B..........................................................................................................................................5
Part C..........................................................................................................................................5
References..................................................................................................................................7

PART A
A partnership is referred as business structure which involves more than one person who
carries business together. In accordance with provision of ATO, a business partnership does
not pay tax on its income (Starting your own business, 2018). However, it is necessary for a
partnership organization to lodge income tax return in order to declare income as well as
deductible expenses. For capital gain tax, each partner owns its own portion of CGT asset and
evaluate capital gain or loss for their share relating to each asset. Every partner is required to
disclose their individual share of partnership’s net income or loss in their individual return
even in case they actually received the income or not (Australian Taxation Office, 2018). In
accordance with ATO, provision the GST component of expense cannot be claimed in case
GST credit has been availed on business activity statement.
(i) Assessable Income of Partnership
Statement presenting assessable income of the partnership for the income year 30th June 2019
Particular Amount in $
Business Income (working note: 1) 378100
Interest income 60000
Rental Income (Rental income – Rental expense) (51000)
Capital Gain (working note : 2) 37500
Total Assessable Income 424600
Note: As the land has been held for more than one year, 50% of CGT discount will be
available and half of capital gain will be included in assessable income.
Working note: 1
Calculation of net business income
Particular Amount in $
Business Income (on a cash basis) 480000
Less: Apprentice salary 35000
Less: Lucy Salary 50000
Internet expenses 1320
Depreciation 10000
Electricity expense 1980
Fringe benefit tax 3600
Net Business Income 378100