A business partnership is a common arrangement for small businesses in Australia. Partners can gain several advantages, but it’s important to remember that a partnership is not perfect for every joint business (there are other options) and the tax implications of a partnership can be quite complicated.
Partnerships aren’t taxed directly, but every partnership must lodge a tax return.
In the “eyes” of the ATO, a partnership is not itself taxable. However, every registered partnership must lodge a partnership tax return each year — even though the partnership entity doesn’t pay income tax directly. In addition to the partnership tax return, each partner must lodge a tax return and pay taxes as an individual, separate to the partnership tax return.
If your business is a partnership, you should be aware of the tax issues and requirements relating to partnerships. Your accountant can advise you on how to minimise taxes while avoiding any ATO troubles for your business at tax time.
Our tax agent registered team helps ensure ATO-compliant lodgement of partnership tax returns, helping avoid ATO complications while providing personalised advice for reducing tax expenses.