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Limited Partnership
What Is Limited Partnership?
A Limited Partnership business can avail the benefits of the company tax rate and the capital gains tax concessions of an individual in a trust. A Limited Partnership serves the following characteristics if well organised:
Partners of the limited partnership possess limited liability
Assets are protected to a great extent
Partners of a limited partnership are capable of accumulating income
Partners are eligible for capital gains tax concessions
Partners of a limited partnership retain distribution flexibility
Income collected through partners is taxed at the company tax rate
A limited partnership business is not accountable under Division 7A
Taxation
Limited Partnership tax return calculations are similar as company, even it is taxed similarly as company for income tax purposes. Although Limited Partnerships is treated as a company for income tax purposes, the partners are not liable to tax unless distribution is made to partners through Limited Partnership. Distribution to partners (drawings) is classified as dividends which may be ‘franked’. Provisions are not maintained for deem payments, loans to associates or genuine loans to partners to be dividends as in Division
Users and Comments
A Limited Partnership can itself act as an operating entity for professionals such as Medical Practitioners, Engineers, Architects, Accountants and other commercial partnerships like Real Estate Agents, Service Entities, and Development Ventures. Limited partnership provides the benefit of limited liability which an ordinary partnership lacks. Limited partnership can be restructured as an ordinary partnership with nominal taxation and stamp duty costs
Substitute Corporate Beneficiary
The Trust retains flexibility, asset protection and prevent issues associated with section 109UB in division 7A, during limited partnership is used to substitute a corporate beneficiary in trust.
Protection of Reserves in a Company
A Limited Partnership efficiently protect, extract and access tax payment and non-tax payment reserves in a company. It even provides flexibility for distribution purposes.
Additional Observations
A worthy consideration is required while maintaining accounts for a Limited Partnership. During distributions are made to partners, limited partnership apply distinct taxation and legal procedure than ordinary partnership
