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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 is done at the 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 deductions for superannuation contributions (as self-employed) are based on age limit. The first $3,000 is 100% deductible; 75% of the amount exceeding $3,000 is deductible
Compliance Requirements
It is obliged to register an Australian Business Number (ABN)
Annual 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 (TFN)
