myTax 2025 Partnerships

Things to know

This section relates to income and losses you have from partnerships. Complete this section if you received, or were entitled to:

• income or loss from a partnership
• a credit for amounts of tax paid on, or amounts withheld from, partnership income
• a share of the 'national rental affordability scheme' tax offset.

A partnership doesn’t pay tax on its income. However, a partnership tax return must be lodged declaring the income earned and the deductible expenses. It will also show the distribution of the net income or loss between the partners.

Each partner must declare their share of the partnership's net income or loss in their individual tax return. This is whether or not they actually received the income.

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

Don’t show at this section

Don't show the following income, losses or offsets at this section:

• Interest you received, or were credited with, from a joint account, where you quoted your individual TFN to the financial institution, go to Interest.
• Income from a corporate limited partnership, go to Dividends.
• A capital gain or a capital loss in respect of your interest in a partnership or a partnership asset, go to Capital gains or losses.
• Any distribution in relation to a foreign resident capital gains withholding credit, go to Capital gains or losses.
• Attributed foreign income from a partnership (unless we instruct otherwise), go to Foreign entities.
• Any Australian franking credits from a New Zealand franking company, go to Other foreign income. Note you can't claim New Zealand imputation credits.
• Any other foreign source income from a partnership (unless we instruct otherwise), go to Other foreign income.
• Rent you derived jointly (or in common) with another person from a jointly held property where you weren't a member of a partnership carrying on a business of renting out properties, go to Rent.
• Your entitlement to an early stage venture capital limited partnership (ESVCLP) tax offset as a partner in a partnership, go to Early stage venture capital limited partnership.
• Your entitlement to an early stage investor tax offset as a partner in a partnership, go to Early stage investor.

Completing this section

To complete this section, you'll need:

• a statement of distribution or advice from the partnership
• details of any expense and franking credit information.

We pre-fill your tax return with partnership distributions provided to us. Check them and add any distribution information that hasn't pre-filled.

To personalise your tax return to show partnerships, at Personalise return select:

• You were a sole trader or had business income or losses or partnership distributions
• Partnerships

To show your partnership details, at Prepare return select 'Add/Edit' at the Business/sole trader and partnership income (including loss details) banner.

At the Partnerships banner:

1. For each partnership distribution that has pre-filled in your tax return, add any distribution information not pre-filled.
2. For each partnership distribution that hasn't pre-filled in your tax return, select Add.
3. Enter your partnership name.
4. Show your share of partnership income or loss and deductions in the corresponding fields:
   • The Depreciation and capital allowances tool can help you to work out any decline in value. It can also work out any deductible balancing adjustment when you stop holding a depreciating asset. Access this tool in the Deductions section on the Prepare return screen.
     Fields from this tool can't be adjusted in myTax. To make any adjustments, or to add new assets to the tool, select the 'Use the depreciation and capital allowances tool' link.
   • Primary production – Complete this part if you have income and deductions from primary production activities from a partnership. To learn more, see Who is a primary producer?
     • Distribution from partnerships
     • Landcare operations and deduction for decline in value of water facility, fencing asset and fodder storage asset
     • Other deductions – If you show an amount at Other deductions, you need to indicate a Type code.
     • myTax will automatically calculate the Net primary production amount.
   • Non-primary production
     • Distributions from partnerships less foreign income – Your share of any franked distributions (that may be shown on your distribution statement from the partnership) is included at this field. The amount should include the amount of any attached franking credits.
       To enable us to work out your Income tests amounts, enter the following fields:
       Partnership net financial investment income or loss
       Partnership net rental property income or loss
       Remaining distribution from partnership
     • Landcare operations expenses
     • Other deductions – If you show an amount at Other deductions, you need to indicate a Type code.
       To enable us to work out your Income tests amounts, enter the following fields:
       Partnership financial investment deductions
       Partnership rental property deductions
       Remaining partnership deductions.
     • myTax will automatically calculate the Net non-primary production amount.
5. Show your partnership share of credits from income and tax offsets in the corresponding fields:
   • Tax withheld where Australian business number (ABN) not quoted
   • Franking credits 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.
   • TFN amounts withheld from interest, dividends and unit trust distributions
   • TFN amounts withheld from payments from closely held trusts
   • Credit for foreign resident withholding amounts (excluding capital gains) – include income you either
     • received when you're 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
     • derived as a foreign resident from which an amount of tax was withheld because of the operation of the foreign resident withholding rules.
   • National rental affordability scheme tax offset.
6. Select Save.
7. Select Save and continue when you have completed the Business/sole trader and partnership income section.

Notes:

• MyTax may remind you of partnership distribution amounts you need to include at Other foreign income.
• If you received, or were entitled to, partnership income as a special professional you must also enter the amount of your taxable professional income in the Other income section. This includes income from activities as an author, an inventor, performing artist, production associate or active sportsperson.
• If you conducted a business activity as a partner in a partnership that resulted in a loss, or resulted in a loss after deducting your expenses, you must complete Loss details.
• You may be entitled to the small business income tax offset if either of the following apply:
  • your partnership distribution included a share of net small business income
  • you had a farm management repayment or other amount you received as a partner in a small business entity.
• Keep a record of each partnership distribution with your other records.

Other deductions – Type

The options are:

• D – if all of the amount is a deferred non-commercial business loss from a prior income year.
• N – if none of the amount is a deferred non-commercial business loss from a prior income year.
• P – if only part of the amount is a deferred non-commercial business loss from a prior income year.

Statement of distribution or advice from the partnership

A statement of distribution or advice from the partnership may show the following details in relation to your share of partnership distribution for tax purposes:

• the amount of any
  • primary production income or loss
  • non-primary production income or loss
• the amount of net small business income from a partnership
• the amount of attributed foreign income and other foreign source income
• the amount of any income on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid
• your entitlement to any of the following credits or tax offsets
  • credit for amounts of tax withheld because the partnership failed to quote its ABN
  • credit for amounts of tax withheld due to the imposition of non-resident withholding tax or managed investment trust withholding tax from partnership income you received when you're a resident
  • share of the 'national rental affordability scheme' tax offset
  • allowable franking credits from franked dividends
  • credit for TFN amounts withheld.

If you think that any details are wrong or are missing from your statement of distribution or advice, contact the managing partner.

You should not receive a distribution of a net capital gain or a net capital loss from a partnership. For information on how a partner shows their share of a capital gain or capital loss, see Guide to capital gains tax.

Who is a primary producer?

A primary producer undertakes:

• plant or animal cultivation (or both)
• fishing or pearling (or both)
• tree farming or felling (or both).

For more information about who is a primary producer, see Primary production activities.

Expense and franking credit information

Remember, you can't claim a deduction for:

• amounts already claimed by the partnership
• expenses you incurred in deriving exempt income or non-assessable non-exempt income.

More information about completing the partnerships section of your tax return using myTax are below:

• Primary production
• Non-primary production
• Franking credits

Primary production

This section covers:

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

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

A partnership can't claim the expenses it incurred as a partnership for eligible expenses on landcare operations, water facilities, fencing assets or fodder storage assets. Costs the partnership incurred are allocated to each partner who can then claim the deduction.

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

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

Other deductions

Include at Other deductions the amount you can claim in relation to your share of primary production income or loss from a partnership.

You can claim a deduction in relation to your share of eligible expenses the partnership incurred on:

• horticultural plants
• grapevines
• electricity connections
• phone lines.

For information on deductions for expenditure on horticultural plants, grapevines, electricity connections and phone lines, see Guide to depreciating assets.

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 rules relating to prepayments may affect the amount you can deduct. For more information on prepayments, see Deductions for prepaid expenses.

If you incurred debt deductions, the thin capitalisation rules may affect the amount you can deduct. For example, debt deductions such as interest and borrowing costs, in deriving assessable income from a partnership, of more than $2 million (alone or combined with those of your associate entities) for 2024–25. For more information, see Thin capitalisation.

You can claim a non-commercial business loss deferred from a prior income year only if it relates to a partnership activity that is the same as, or similar to, your 2024–25 partnership activity.

You may need to reduce the deferred non-commercial business loss deduction you claim in 2024–25 if you earned net exempt income in 2024–25. 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. You can't deduct the loss in 2024–25 or any future income year.

For more information on how exempt income and bankruptcy affect deferred non-commercial business losses, see paragraphs 117 and 118 of Taxation Ruling TR 2001/14 Income tax: Division 35 – non-commercial business losses or contact us.

Non-primary production

This section covers:

• Landcare operations expenses
• Other deductions

Landcare operations expenses

A partnership can't claim the expenses it incurred as a partnership for eligible expenses on landcare operations. Costs the partnership incurred are allocated to each partner who can then claim the deduction.

Include at Landcare operations expenses your share of the expenses that relate to non-primary production income or loss from partnerships that you can deduct this year.

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

Other deductions

Include at Other deductions the amount you can claim in relation to your share of non-primary production income or loss from a partnership.

You can claim a deduction in relation to your share of eligible expenses the partnership incurred on electricity connections. For more information about deductions for expenditure on electricity connections, see Guide to depreciating assets.

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 incurred debt deductions, the thin capitalisation rules may affect the amount you can deduct. For example, debt deductions such as interest and borrowing costs, in deriving assessable income from a partnership, of more than $2 million (alone or combined with those of your associate entities) for 2024–25. For more information, see Thin capitalisation.

You can claim a non-commercial business loss deferred from a prior income year only if it relates to a partnership activity that is the same as, or similar to, your 2024–25 partnership activity.

You may need to reduce the deferred non-commercial business loss deduction you claim in 2024–25 if you earned net exempt income in 2024–25. 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. You can't deduct the loss in 2024–25 or any future income year.

For more information on how exempt income and bankruptcy affect deferred non-commercial business losses, see paragraphs 117 and 118 of Taxation Ruling TR 2001/14 Income tax: Division 35 – non-commercial business losses or contact us.

Franking credits

Enter your share of any allowable franking credits which you're 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 that 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 can't claim a franking credit for a dividend paid to the partnership which was exempt income or non-assessable non-exempt income.

In addition, you may not be entitled to claim the franking credits if any of the following apply:

• within 45 days of buying the shares (90 days for certain preference shares), you either sold them or entered into an arrangement to reduce the risk of making a loss on them
• you were under an obligation to make, or were likely to make, a related payment
• you received a dividend as a result of a dividend washing arrangement.

These rules apply to your interests in the shares held by the partnership in the same way that the rules apply to shares you own directly.

For more information on these rules, see When you're not entitled to claim a franking tax offset.