Steps To Lodge Partnership Tax Return In Australia

Whenever you register your business, you naturally become abide by a set of government rules. One of them is to pay taxes and lodge tax returns on time; otherwise, you may have to pay penalties. However, there are differences in tax return lodgment based on the business structure you will have. One can do this job all by himself or by hiring a professional tax return agent. This article will get to know the steps to lodge your tax return for your partnership business in a detailed and comprehensive manner.

What is a partnership tax return?

A partnership business consists of two owners where the total profit gets shared between the two owners according to a signed agreement. A partnership is not a separate legal entity. To operate a partnership business, you must have a different Tax File Number (TFN), an Australian Business Number (ABN) income return provides information to the tax authority about your partnership’s net income assessable income, fewer tax deductions, and expenses. Each partner needs to lodge an individual tax return, where they both need to report their share of partnership profits separately and pay taxes at their tax rates. 

Taxes that a partnership needs to pay include GST, PAYG installments, PAYG withholdings, wine equalization tax, luxury car tax, and FBT installments. Whenever you register for BAS and ABN, you will automatically get a business account statement (BAS) from ATO. For lodging taxes, you can take help from a registered BAS agent Perth.

You can either lodge the tax return for your partnership business online, or a registered tax agent can do the job for you. For the former, the due date generally falls on 31st October, while in the latter case, the agent himself will tell you when they will lodge the return. 

What are the schedules for lodging partnership tax returns?

As per ATO’s guidelines, you must attach all the completed schedules with the form. Otherwise, returns can get rejected from consideration, and failure to lodge them within time can also lead to administrative penalties. Remember that, while filling out the schedules, you need to print them in block letters using only a black pen. 

  1. International dealings schedule: This schedule form needs to be completed if you had business earnings in foreign currency. Or if your transaction values related to business with international parties were greater than $2 million, or if you had any overseas expenses in the previous financial year.
  2. Non-individual PAYG payment summary schedule: PAYG stands for ‘Pay As You Go’, which applies to certain types of payments. These include payments for a specific supply with no ABN, payments coming from investments that also have no ABN and several payments given to foreign residents mentioned in the regulations. Each PAYG payment summary schedule form should include the payer’s name, payer’s ABN (or withholding payer number), the total amount of tax withheld and gross payment. 

What information do you need to complete on page 1 of the partnership tax return form?

You will have to fill out the following information on page 1 of the partnership tax return form.

  1. Tax File Number: You will find boxes on the form where you will print the TFN.
  2. Name of partnership: There should be consistency in the partnership name every year. If the partnership name is legally changed, then you should inform ATO about that in written form. You should include the last name of the partnership and the time the change is made. 
  3. Australian Business Number: ABN is a unique number that the Australian government uses to identify a business body for necessary dealings. Apart from the central government, state, territory and local government bodies also keep this in the record. For tax law purposes, the inclusion of ABN is a must.
  4. Full names of the partners: Full first names and surnames of the partners should be provided on the form because tax notices will be sent only to the partners. If the partner is a company, the name and the ABN should be provided.
  5. Interposed Entity Election Status: This item should be completed if one of the conditions applies: if the partners make one or more interposed entity elections on a specified day of 2004-05 or any later income year, if the same has been made in any income years from 1994-95 to 2016-17, or if the partners are revoking any previously made interposed entity election from the time of 2017-18.

What information do you need to provide to complete your partnership tax return?

Once you have filled out the previous information, now it is time to complete the remaining information to complete the whole procedure.

  1. Business activity and status items: In this section, you will need to include all the necessary information regarding the source of gross income as accurately and detailed as possible. 
  2. Income excluding foreign income items: Here, you will write various business incomes like partnerships, rents, gross interest, dividends, but no foreign income information.
  3. Deduction items: Allowable deductions include deductions related to Australian investment scheme income and Forestry managed investment scheme deduction. You can consult with any certified accountant in Perth to get the maximum deductions.
  4. Foreign income items: There can be two types of overseas branching. An Australian entity can carry out a business in another country, or a foreign entity can carry out a business in Australia. If you have any of these overseas branch operations, you should mention that information in the appropriate field. You should check both listed countries and unlisted countries before lodging your tax.
  5. Personal services income item: Personal services income or PSI is an income that is usually given to an individual as a reward for his or her exceptional skills or efforts shown at any business venture. But PSI does not include any expenses that come from selling goods or operating equipment.

Apart from all this information, other items include overseas transactions details, taxation of financial arrangements items, business and professional items, etc. To know more, you can easily open the website of ATO and get step-by-step details of the whole procedure.

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