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  • Introduction

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    These instructions will help you complete the Partnership tax return 2012 (NAT 0659). They are not a guide to income tax law. You may need to refer to other publications.

    When we say 'you' or 'your business' in these instructions, we mean either you as the partnership that conducts a business or you as the registered tax agent or partner responsible for completing the tax return.

    These instructions contain abbreviations for names or technical terms. Each term is spelt out in full the first time it is used and there is a list of abbreviations.

    What's new?

    International dealings schedule

    The International dealings schedule 2012 (IDS) is used for taxpayers to report specific information on international dealings. The requirement to lodge the IDS is dependent on answers provided at specific questions in a company, partnership or trust tax return - these trigger questions are identified on the tax return and in the instructions.

    Some elements to note in the IDS include:

    • The threshold for reporting details of international related party dealings is now $2 million.
    • The schedule has specific questions on internally recorded dealings with permanent establishments (branch operations).
    • Superannuation funds are not required to complete the IDS.
    • The IDS is available to lodge on a paper form or electronically.

    For further information, go to the IDS instructions or email idsproject@ato.gov.au

    Repeal of foreign investment fund and deemed present entitlement rules

    The Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010External Link repealed section 96A, Part XI (the FIF rules) and sections 96B and 96C (the deemed present entitlement rules) of the Income Tax Assessment Act 1936 (ITAA 1936). The repeal is applicable to the 2010-11 year of income and later years of income. In the absence of the FIF and deemed present entitlement rules, resident beneficiaries holding interests in foreign trusts will need to turn to the ordinary trust rules contained in Division 6 and the transferor trust provisions in Division 6AAA of the ITAA 1936 in order to determine their tax obligations. The ordinary trust rules will also continue to apply in precedence to the transferor trust rules.

    Reforms to income tests

    In the 2008 Federal Budget the Government announced measures to reform income tests across the tax and benefit systems. These measures will help to ensure Government assistance is targeted to those most in need. The measures also remove inconsistencies in the treatment of non-wage remuneration and ensure net losses from investment activities are better accounted for in income tests. The reforms to income tests measure took effect on 1 July 2009.

    We have added new questions to the partnership tax return to determine each partner's share of net financial investment income or loss and net rental property income or loss. If partners have these amounts, they will need to include them when completing the net financial investment loss and net rental property loss items in their own income tax return.

    Private company dividends

    Tax Laws Amendment (2010 Measures No. 2) Act 2010 received royal assent on 28 June 2010. This Act tightens the private company dividend rules in Division 7A to improve its fairness and integrity. The rules in Division 7A prevent private companies from making tax free distributions of profits to shareholders or their associates. These rules also apply where a private company has an unpaid present entitlement from a trust and the trust makes a loan or certain payments to, or forgives the debt of, a shareholder (or their associate) of the private company. In this case, the payments, loans and forgiven debts are treated as dividends.

    The changes reduce the scope for private companies to allow company assets to be used for free or at less than their arms length value without paying tax. A range of other amendments will be made to strengthen these rules.

    These changes apply from 1 July 2010.

    Last modified: 12 Feb 2019QC 25837