Partnership and trust distributions - common mistakes to avoid 2011

You should read this fact sheet if your clients are either of the following:

• partners in a partnership
• trustees or beneficiaries of a trust.

Do you need to lodge a trust or partnership return?

If required by the Commissioner of Taxation, trusts need to lodge a trust tax return irrespective of the amount of income derived or distributions made. A trust that was a subsidiary member of a consolidated group for the full income year does not have to lodge a trust tax return.

Partnerships need to lodge an annual partnership tax return. A partnership tax return is not necessary if one of the following applies:

• the partnership was a subsidiary member of a consolidated group for the full income year
• we approved an application for exemption from lodging a partnership tax return
• the partnership's only income was rent, interest or dividends derived jointly (or in common) and it was not carrying on a business (each partner shows their share of the rent, interest or dividends and the associated expenses at the appropriate items on their individual tax return).

If your client is a partnership that does not have to lodge a tax return, you should either: lodge a client update (CU) form advise us through the Tax Agent Portal that the partnership does not need to lodge.

For more information, refer to: Trust tax return instructions 2011 Partnership tax return instructions 2011