More information

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

Partnership income or loss

If the partnership in which you were a partner paid you salary, wages or allowances you must show that income at this section.

You show your share of:

• any primary production partnership income or loss at Distribution from partnerships under the Primary production section
• any non-primary production partnership income or loss (excluding any attributed foreign income or other foreign source income) at Distribution from partnerships less foreign income under the Non-primary production section. Ensure that your share of any franked distributions (that may be shown on your distribution statement from the partnership) is included at this field. The amount included should include the amount of any attached franking credits.

Professional income

If the partnership income which you have received, or to which you are entitled, includes income from activities as an author of a literary, dramatic, musical or artistic work, or as an inventor, performing artist, production associate or active sportsperson, you must also enter the amount of this taxable professional income in the Other income section. Select Any other income and then Type of payment is 'Special professional income'. You will not be taxed twice on this income.

Deductions

Remember, you cannot claim a deduction for amounts already claimed by the partnership, or for expenses incurred in deriving exempt income or non-assessable non-exempt income.

If you made a prepayment of $1,000 or more for something to be done (in whole or in part) in a future income year, the amount you can deduct may be affected by the rules relating to prepayments. For more information on prepayments, see Deductions for prepaid expenses.

If you have incurred debt deductions, such as interest and borrowing costs, in deriving assessable income from a partnership, of more than $2,000,000 (alone or combined with those of your associate entities) for 2018–19, the amount that you can deduct may be affected by the thin capitalisation rules. For more information, see Thin capitalisation.

Primary production deductions

Landcare operations and business deduction for decline in value of water facility, fencing asset and fodder storage asset

If you were a partner in a partnership that incurred eligible expenditure on landcare operations, water facilities, fencing assets or fodder storage assets, the partnership cannot claim the expenditure. Costs incurred by the partnership are allocated to each partner who can then claim the deduction.

Enter your share of the total of any such expenditure that relates to primary production income or loss from partnerships that you can deduct this year at Landcare operations and business deduction for decline in value of water facility, fencing asset and fodder storage asset.

For more information on deductions for expenditure on landcare operations, water facilities, fencing assets and fodder storage assets, see the Guide to depreciating assets.

Other deductions

Enter the total of any other deductions (including non-commercial business losses deferred from a prior year) you can claim in relation to your share of primary production income or loss from a partnership at Other deductions.

If you were a partner in a partnership and you can claim a deduction in relation to your share of eligible expenditure incurred by the partnership on horticultural plants, grapevines, electricity connections or phone lines, include any such deduction that relates to primary production income or loss from a partnership at Other deductions. For information about deductions for expenditure on horticultural plants, grapevines, electricity connections and phone lines, see Guide to depreciating assets.

Include a non-commercial business loss deferred from a prior year business activity only if it relates to one of your current year partnership business activities which is the same as, or similar to, the prior year business activity which generated the loss.

The deferred non-commercial business loss deduction you can claim in 2018–19 may be reduced if you earned net exempt income in 2018–19. For more information see How to offset your losses.

If you became bankrupt (or received a relief from debt) the deferred losses will no longer be available. The loss cannot be deducted in the current year or any future year.

For more information about how exempt income and bankruptcy affect deferred non-commercial business losses, phone 13 28 66.

Non-primary production deductions

Landcare operations expenses

If a partnership incurs eligible expenditure on landcare operations, the partnership cannot claim the expenditure. Costs incurred by the partnership are allocated to each partner who can then claim the deduction. Enter your share of the total of any such expenditure that relates to non-primary production income or loss from partnerships that you can deduct this year at Landcare operations expenses.

For more information on deductions for expenditure on landcare operations, see Guide to depreciating assets.

Other deductions

Enter the total of other deductions (including non-commercial business losses deferred from a prior year) you can claim in relation to your share of non-primary production income or loss from a partnership at Other deductions.

If you were a partner in a partnership and you can claim a deduction in relation to your share of eligible expenditure incurred by the partnership on electricity connections, include any such deduction that relates to non-primary production income or loss from partnerships at Other deductions. For information about deductions for expenditure on electricity connections, see the Guide to depreciating assets.

Include non-commercial business losses deferred from a prior year only if they relate to a partnership activity which is the same as, or similar to, your current year partnership activity.

The deferred non-commercial business loss deduction you can claim in 2018–19 may be reduced if you earned net exempt income in 2018–19. For more information see How to offset your losses.

If you became bankrupt (or received a relief from debt) the deferred losses will no longer be available. The loss cannot be deducted in the current year or any future year.

For more information about how exempt income and bankruptcy affect deferred non-commercial business losses, phone 13 28 66.

Share of credits from income and tax offsets

If the partnership income includes or is attributable to:

• income from which an amount of tax was withheld because an Australian business number was not quoted, then enter your share of the credit at Tax withheld where ABN not quoted
• interest, dividends and unit trust distributions from which tax file number (TFN) amounts have been withheld, then enter your share of the credit at TFN amounts withheld from interest, dividends, and unit trust distributions
• payments from a closely held trust from which TFN amounts have been withheld, then enter your share of the credits for those amounts withheld at TFN amounts withheld from payments from closely held trusts
• national rental affordability scheme (NRAS) rent, then enter your share of the NRAS tax offset at National rental affordability scheme tax offset.

Also, if the partnership income includes or is attributable to income that

• you received when you were an Australian resident from which an amount of tax was withheld because of the imposition of non-resident withholding tax or managed investment trust withholding tax, or
• you derived as a foreign resident from which an amount of tax was withheld because of the operation of the foreign resident withholding rules.

then enter the amount of these credits for amounts withheld at Credit for foreign resident withholding amounts (excluding capital gains)

Franking credits

Enter the amount of your share of any allowable franking credits which you are entitled to claim as a franking tax offset through a partnership at Franking credit from franked dividends.

You can only claim a share of a franking credit which relates to the share of a franked dividend paid to a partnership which is indirectly included in the amount of partnership income or loss you show at Distribution from partnerships less foreign income.

Therefore, you cannot claim a franking credit for a dividend paid to the partnership which was exempt income or non-assessable non-exempt income.

In addition, in order to claim a franking credit in respect of a particular dividend both you and the partnership must be qualified persons in relation to that dividend (see below).

Qualified person

There are rules, known as franking credit trading rules, designed to prevent the use of franking credits by persons who only briefly own their shares or who do not effectively own their shares. Under these rules, known as the 'holding period rule' and the 'related payments rule', you must satisfy certain criteria before you are considered to be a qualified person.

If you derived dividends indirectly through a partnership you need to determine what component of the partnership distribution is attributable to a particular dividend, and then determine whether you have satisfied the holding period rule and the related payments rule in relation to that dividend.

The partnership itself must also have satisfied these rules.

The holding period rule applies to shares bought on or after 1 July 1997. It applies to you if you (or the partnership) sold shares within 45 days of buying them. It also applies to you if you (or the partnership) entered into a risk reduction arrangement, such as a derivative transaction, within that time. The holding period is 90 days for certain preference shares.

The related payments rule applies to arrangements entered into after 7.30pm (Australian Eastern Standard Time) on 13 May 1997. It applies to you (or the partnership) if you were under an obligation to make a related payment for a dividend and you did not hold your shares 'at risk' during a specified qualifying period.

If you failed to satisfy the holding period rule, and the related payments rule does not apply to you, you may still be entitled to a franking tax offset if you qualify for the small shareholder exemption. The small shareholder exemption applies provided that you do not exceed the franking tax offset ceiling of $5,000 on all your franking tax offset entitlements in a given year, whether received directly or indirectly through a partnership.

If any of these measures are likely to affect you, see You and your shares.