Show download pdf controls
  • PAYG instalment income – partnerships

    Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability. It applies to you if you earn business and/or investment income over a certain amount.

    If you are required to pay PAYG instalments, you still need to lodge an annual tax return.

    We will notify you if you need to start paying by instalments. Alternatively, you can voluntarily enter PAYG instalments and make payments towards expected annual income tax liabilities. We will send you an activity statement or instalment notice before your PAYG instalments are due.

    As an individual, you can view, lodge, pay, vary and manage all your PAYG instalment obligations online, if you have a myGov account linked to the ATO.

    See also:

    When to use these instructions

    If you're a partner in a partnership and you choose Option 2 (instalment rate) to work out your PAYG instalments, these instructions will help you work out your proportion of the partnership's instalment income to be included in your total instalment income.

    Your instalment income is generally the ordinary income you have derived in the period that is assessable income for that income year. Your assessable income will include your proportion of the instalment income earned by the partnership for the period.

    See also:

    Working out your proportion

    There is a formula for working out your proportion of the partnership's instalment income.

    You need to know the amounts for A, B and C of the formula below to work out what proportion of the partnership's instalment income to include in your own instalment income for the current period.

    You can use the partnership's most recent tax return to find the information you need.

    These amounts need to be updated when a future tax return is lodged for the partnership, usually once a year, or when the most recent partnership tax return is amended.

    Formula

    • (A ÷ B) × C

    A is your assessable income from the partnership for the last income year.
    This amount is shown on the partnership's tax return at item 51 (labels A+B).

    B is the partnership's instalment income for the last income year.
    This is generally the partnership's gross ordinary income. It is the total of the amounts shown on the partnership's tax return at the following items:

    • 5: Total business income
    • 8: Distribution from partnerships (item A and B only) and Distribution from trusts (items Z and R only)
    • 9: Gross rent (item F only)
    • 10: Forestry managed investment scheme income
    • 11: Gross interest (item J only)
    • 12: Dividends received (items K and L only)
    • 14: Other Australian income (item O)
    • 23: Other assessable foreign source income (item B only)
    • 31: Taxation of financial arrangements (TOFA).

    If the partnership is a mature TOFA entity, only the net TOFA income needs to be included in instalment income.

    Net TOFA income is calculated by first reducing instalment income by the value of gross TOFA income that has been received, then adding back the net TOFA amount.

    The net TOFA amount is calculated as TOFA gains (label M) less TOFA losses (label N). Only include if this is a positive amount.

    C is the partnership's instalment income for the current period.
    You can obtain this amount from the partnership's records for each instalment period.

    There may be times when the result is zero (for example, because the partnership incurred a loss in an earlier year). In these cases, you must estimate a fair and reasonable amount of current instalment income from the partnership.

    There is a worksheet at the end of these instructions you can use to help work out your proportion of your partnership's instalment income. If you are a partner in more than one partnership, you need to include an amount for each partnership.

    Example

    This example is based on the Partnership tax return.

    Example: Working out your share of your partnership's instalment income

    Bob earns income from investments and is also a partner in a partnership that is registered for goods and services tax (GST).

    Bob and his wife operate a farming business in partnership. Bob is required to pay PAYG instalments and we have notified him of an instalment rate. Bob works out his PAYG instalments using Option 2 (instalment rate × instalment income).

    Bob needs to work out his proportion of instalment income from the partnership and the amounts he has earned in his own capacity.

    To work out his proportion of the partnership's instalment income, Bob needs to know the amounts for the above formula:

    • A: assessable income from the partnership for the last income year
    • B: the partnership's instalment income for the last income year
    • C: the partnership's instalment income for the current period.

    He obtains the first two amounts from the partnership's tax return for the most recent year for which he has an assessment, as shown below. Bob's assessable income from the partnership for the last income year is shown as $8,900 at item 51 (labels A + B) on the partnership's tax return.

    Item 51 on the Partnership tax return with label A completed with 8,900

    The partnership's instalment income for the last income year is the partnership's gross ordinary income. It is the total of the amounts shown at the following items:

    5 Business income and expenses
    The amount is $50,000 at label G (Other business income)

    Item 5 on the Partnership tax return with label G ant total business income completed with 50,000

    Plus

    8 Partnerships and trusts
    The amount is nil so it is left blank

    Plus

    9 Rent
    The amount is $11,000 at label F (Gross rent)

    Item 9 on the Partnership tax return with label F completed with 11,000

    Plus

    10 Forestry managed investment scheme income
    The amount is nil so it is left blank

    Plus

    11 Gross interest, including Commonwealth Government loan interest
    The amount is $163 at label J

    Item 11 on the Partnership tax return with label J completed with 163

    Plus

    12 Dividends
    The amount is nil so it is left blank

    Plus

    14 Other Australian income
    The amount is nil so it is left blank

    Plus

    23 Other assessable foreign source income, other than income shown at Item 22
    The amount is nil so it is left blank

    Plus

    31 Taxation of financial arrangements (TOFA). Total TOFA gains (label M) less TOFA losses (label N). Only include if this a positive amount
    The amount is nil so it is left blank

    The total partnership instalment income for the last income year is $61,163, as shown at the items on the partnership's tax return above.

    The partnership's instalment income for the current period is $47,500. This includes an amount for sale of livestock, and also contract income.

    Bob's proportion of the partnership's instalment income for the quarter is:

    ($8,900 ÷ $61,163) × $47,500 = $6,911

    Bob adds $6,911 to his other investment income when working out his instalment income for the period.

    End of example

    Worksheet

    Use this worksheet to work out your proportion of your partnership's instalment. This worksheet is based on the Partnership tax return.

    Calculating your proportion of your partnership's instalment income

     


    Item

    Total

    A

    Your assessable income from the partnership for the last income year (item 51, labels A + B)

    $

    B

    Partnership's instalment income for the last income year

     


    Total business income (item 5)

    $

    Distribution from partnerships (items 8A and 8B)

    $

    Distribution from trusts (items 8Z and 8R)

    $

    Gross rent (item 9F)

    $

    Forestry managed investment scheme income (item 10Q)

    $

    Gross interest (item 11J)

    $

    Dividends received (items 12K, 12L and 12M)

    $

    Other Australian income (item 14O)

    $

    Other assessable foreign source income (item 23B)

    $

    Taxation of financial arrangements (TOFA). Total TOFA gains (label M) less TOFA losses (label N). Only include this (item 31) if it is a positive amount

    $

    Total

    $

    C

    Partnership's instalment income for the current period

    $

    Your proportion of the partnership's instalment income is:

    (A ÷ B) × C

    ($............... ÷  $................) × $ ................ = $ .................

    $

    See also:

      Last modified: 22 Feb 2017QC 16275