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  • PAYG instalments for partnerships

    If you're in a partnership and you're a pay as you go (PAYG) instalments payer, there are rules to work out your instalment income and how much you need to pay.

    You may receive more than one activity statement. For example, if your partnership is registered for GST, you'll receive separate activity statements for:

    • the partnership, to report GST
    • your own PAYG instalment.

    Find out about:

    Calculating your instalments

    Using the instalment amount (option 1)

    If you use the instalment amount (option 1), we'll work out your instalments and then you pay the amount we calculate.

    Using the instalment rate (option 2)

    If you use the instalment rate (option 2), the instructions below will help you work out your share of the partnership's instalment income. You'll include this as your instalment income on your activity statement.

    Next steps:

    Working out your share of income

    Your share of the instalment income earned by the partnership generally includes ordinary assessable income received in the period.

    To work out your share of the partnership's instalment income use the simple formula (A ÷ B) × C, where:

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

    These amounts need to be updated when:

    • a future tax return is lodged for the partnership
    • the most recent partnership tax return is amended.

    Assessable income from the partnership for the last income year

    This amount is shown on the partnership's tax return at item 51 (labels B).

    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:

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

    Note on TOFA: If the partnership is a Taxation of financial arrangements (TOFA) entity, only include the 'net TOFA amount'. The net TOFA amount is TOFA gains (label M) minus TOFA losses (label N). If the net TOFA amount is:

    • positive – subtract the TOFA losses (label N) from the sum of the labels
    • negative – subtract the TOFA gains (label M) from the sum of the labels.

    Partnership's instalment income for the current period

    You can get this amount from the partnership's records for each instalment period.

    There may be times when the amount 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.

    The following example demonstrates how to work out the share of instalment income for a partnership. You can then use the worksheet below to work it out for your situation. If you are a partner in more than one partnership, you need to include amounts for each partnership.

    Next steps:

    Example

    This example is based on the Partnership tax return.

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

    Bob earns income from investments. He is also a partner (with his wife) in a farming business that is registered for GST.

    Bob is required to pay PAYG instalments. He has chosen to pay using Option 2 (instalment rate × instalment income) and we have notified him of an instalment rate.

    Bob needs to work out his share of the instalment income from the partnership.

    To use the formula (A ÷ B) × C, Bob needs to know:

    • 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.

    By going through the partnership's tax return for the last income year, Bob will find the information he needs to enter into the worksheet he downloaded.

    Step 1: Assessable income from the partnership will be shown at item 51. Bob should record the sum of labels A + B. In Bob's case this is $8,900.

    Step 2: The partnership's instalment income is the partnership's gross ordinary income. It is the total of the amounts shown at the following:

    • Item 5: Business income and expenses. For Bob, the amount at label G (Other business income) is $50,000.
    • Item 8: Partnerships and trusts. For Bob, the amounts at labels A and B (partnerships) and Z, R and F only (trusts) are zero.
    • Item 9: Rent. For Bob, the amount at label F (Gross rent) is $11,000.
    • Item 10: Forestry managed investment scheme income. For Bob, the amount at label Q is zero.
    • Item 11: Gross interest, including Commonwealth Government loan interest. For Bob, the amount at label J is $163.
    • Item 12: Dividends. For Bob, the amount at labels K and L are zero.
    • Item 14: Other Australian income. For Bob, the amount at label O is zero.
    • Item 23: Other assessable foreign source income. For Bob, the amount at label B is zero.
    • Item 31: Taxation of financial arrangements (TOFA). Total TOFA gains (label M) less TOFA losses (label N). Only include if this is a positive amount. For Bob, the amount is zero.

    Therefore, the total partnership instalment income for the last income year is:

    • $50,000 + $11,000 + $163 = $61,163

    Step 3: The partnership's instalment income for the current period is $47,500. This includes amounts for the sale of livestock and contract income.

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

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

    Bob needs to add this amount to his investment income to works out his total instalment income for the period.

    End of example

    Next steps:

    Worksheet

    You can use the worksheet below to calculate your share of your partnership's instalment income. This worksheet is based on the Partnership tax return.

    Download the Partnership instalment income worksheet (XLS, 13KB).

    Next steps:

    See also:

      Last modified: 29 Jul 2019QC 16275