Capital allowances for primary producers and some landholders
A partnership can't claim a deduction under Subdivisions 40-F and 40-G of the ITAA 1997 for:
- the decline in value of a water facility, horticultural plant (including grapevine), fencing asset and fodder storage asset
- electricity connections and phone lines
- landcare operations.
Each partner can claim a deduction in accordance with any agreement on how the expenditure is to be borne or, if there is no agreement, according to each partner’s interest in the partnership income or loss.
For more information, see Guide to depreciating assets 2025.
Farm management deposits scheme
The farm management deposits (FMD) scheme reduces fluctuations in a primary producer’s income.
A partnership can't have an FMD or claim a deduction for a deposit to an FMD.
A partner in a partnership that carries on a primary production business in Australia may be able to claim a deduction in the income year for an amount they deposited into an FMD they own. The deposit must be made by or on behalf of the owner of the FMD. Any repayments of that deposit are assessable income to the extent they have been previously claimed as a deduction.
For more information on FMD deposits and repayments, see question 17 Net farm management deposits or repayments in the Supplementary tax return instructions 2025 and Information for primary producers 2025.
Partnership losses
If a partnership loss is incurred by a partnership in an income year, individual partners can claim a deduction for their share of the partnership loss. A partnership loss is incurred if the allowable deductions (other than deductions allowable for personal super contributions or tax losses of earlier years under the ITAA 1997) exceed the assessable income of the partnership. The partnership loss is the amount of that excess.
For the tax treatment of current year foreign losses of the partnership, see Net foreign source income.
Rules on deferring non-commercial business losses may apply to a partner who is an individual, to defer the deduction for their share of a loss from a business activity of the partnership. For more information on these rules, see question 16 Deferred non-commercial business losses in the Supplementary tax return instructions 2025 and Non-commercial losses: partnerships.
Research and development tax offset
Eligible companies may be entitled to a tax offset for eligible expenditure incurred on qualifying R&D activities. A partner in a partnership of otherwise eligible companies (an R&D partnership) may also be entitled to the R&D tax incentive for eligible expenditure on qualifying activities. For information on how a company may claim the R&D tax incentive, see Research and development tax incentive schedule instructions 2025.
Small business income tax offset and non-commercial losses
The non-commercial loss rules will apply to a partner’s share of a partnership business loss and may also affect their share of net small business income. For more information on these rules, see question 16 Deferred non-commercial business losses in the Supplementary tax return instructions 2025.
Depending on how the non-commercial loss rules apply to the individual partner, the individual partner may need to adjust their share of the partnership’s net small business income in their own individual tax return accordingly.
Super
For information on claiming a deduction for personal super contributions, see D12 Personal superannuation contributions 2025.
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