You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051270599253

Date of advice: 18 August 2017


Subject: GST and reconstituted partnership


Is the reconstituted Partnership able to continue to use the same TFN, ABN and GST registration?



Relevant facts and circumstances

You are a Partnership that operates a business for mutual profit. The Partnership is registered for GST.

Prior to 1 July 2017, the Partnership consisted of X Partners. From 1 July 2017, another Partner was admitted into the Partnership.

All continuing Partners and the new Partner agree to the continuity and reconstitution of the Partnership.

The date of the reconstitution is 1 July 2017.

No Partners are retiring.

The Partnership has no formal agreement, but your conduct is consistent with continuity as nothing in the manner in which you conduct your business or interact as partners has changed.

There has been no break in the continuance of the enterprise from the day prior to the reconstitution of the partnership to the day after. That is:

    ● the enterprise remains unchanged and the client base will not alter, and

    ● the nature of the partnership services will not change in any way, it will continue to function on an ongoing basis, will keep the same name and the day to day running of the enterprise will not be altered.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 195-1.

Reasons for decision

The meaning of 'partnership’ for the purposes of GST is defined in section 195-1 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) by reference to the definition of 'partnership' in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). Section 995-1 of the ITAA 1997 provides:

    partnership means:

      (a) an association of persons (other than a company or a limited partnership) carrying on business as partners or in receipt of ordinary income or statutory income jointly; or

    (b) a limited partnership.

The first limb of paragraph (a) in the above definition refers to 'an association of persons (other than a company or limited partnership) carrying on a business as partners'. This reflects the general law definition of a partnership, which is 'the relation which subsists between persons carrying on a business in common with a view of profit'. The ATO refers to this type of partnership as a 'general law partnership'.

Goods and Services Tax Ruling GSTR 2003/13 Goods and Services Tax: general law partnerships ('GSTR 2003/13’) contains the ATO view regarding the treatment of general law partnerships for the purposes of GST, and more specifically, when a partnership is considered to have been 'reconstituted'.

Paragraph 127 of GSTR 2003/13 has been reproduced below:

    127. A dissolution leading to the winding up of the partnership is called a general dissolution. A dissolution that does not result in the winding up of a partnership is called a technical dissolution. A technical dissolution occurs where the assets and liabilities of the partnership are taken over by the continuing partners (and any new partners) and the partnership business is continued without any apparent break.

The rationale for distinguishing a technical dissolution from a general dissolution is explained at paragraphs163 to164 of GSTR 2003/13:

    163 To regard a change in the membership of a partnership as leading to a winding up of an existing partnership and the formation of a new partnership would lead to administrative and compliance difficulties for the partnership and its partners. This would be the case particularly for partnerships that experience frequent membership changes. . Every change in membership would require cancellation of the partnership's GST registration (and Australian Business Number (ABN)) and re-application for a new GST registration (and ABN) by the continuing partners.

    164 We consider that, for GST purposes, it is open and appropriate for the Commissioner to accept that a change in membership does not necessarily result in the general dissolution and winding up of the partnership.

Technical dissolution

Paragraph 148 of GSTR 2003/13 states the following:

    148. Under general law, any change in the membership of a general law partnership leads to its dissolution. However, as previously discussed in paragraphs 126 and 127 of this ruling, the dissolution may not lead to the winding up of the partnership. The continuing partners and any new partner may conduct the business of the partnership without any break in its continuity. We refer to this as a reconstituted partnership.

Paragraph 149 of GSTR 2003/13 provides that whether or not there is a reconstituted partnership depends on the intention of the parties, and the terms and conditions of the partnership agreement.

In addition to the above, paragraph 150 of GSTR 2003/13 explains that a written partnership agreement may expressly provide for the continuation of the business in the event that there is a change to the membership of the partnership, which is often referred to as a 'continuity' or 'non-dissolution clause'. In the absence of a written agreement, such a clause may be implied by the conduct of the partners following the retirement or death of a partner, or introduction of a new partner.

According to the facts you provided to us:

    ● the enterprise remains unchanged and the client base will not alter;

    ● the nature of the partnership services will not change in any way, it will continue to function on an ongoing basis, will keep the same name and the day to day running of the enterprise will not be altered.

You have also informed us that there is no written agreement in place in relation to incoming and outgoing partners that will allow for the continuity of the same partnership but the partners are in agreement for the new partner to join the partnership and for the partnership to continue as a reconstituted continuing partnership.

Practice Statement Law Administration PS LA 2011/8 ('PS LA 2011/8’) provides the following guidelines on whether a reconstituted partnership can use the ABN, TFN and GST registration of the original partnership:

As outlined in paragraph 107 of PS LA 2011/8, the following conditions must be satisfied if a reconstituted partnership wishes to continue to use its existing TFN, GST registration or ABN:

    ● There must be at least one continuing partner who is a member of the partnership prior to and following the reconstitution.

    ● There must be an express or implied continuity clause agreed to by the continuing, incoming and outgoing partners. This includes a clause in the partnership agreement, a statement signed by the partners or an oral agreement by the partners.

In addition, the following must be satisfied:

    ● substantially all of the partnership assets remain with the continuing partnership

    ● the nature of the enterprise remains substantially unchanged

    ● the client or customer base remains substantially unchanged

    ● the business name or name of the firm remains unchanged

Furthermore, when lodging the partnership tax return, the following details must be supplied:

    ● The date of the dissolution

    ● The date of the reconstitution

    ● The names of the new, continuing and retiring partners

    ● The TFN or address and date of birth of all new partners, and

    ● Details of the changes if the persons authorised to act on behalf of the partnership have changed.

In this case we agree that the conditions above for a reconstituted partnership are satisfied and we are of the view that you can continue as a reconstituted partnership. Provided that the reconstituted partnership lodges its tax return including all the required details above, the partnership will be able to use its existing ABN, TFN and GST registration.