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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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 private ruling

Authorisation Number: 1012607933913

Ruling

Subject: Lodgment of income tax returns

Question 1

Are you required to lodge an income tax return for the 2007 to 2013 income years?

Answer

The partnership is not required to lodge an income tax return as it's only was from interest derived jointly by the partners. Each partner should include their share of the interest income in their own individual income tax return.

This ruling applies for the following periods:

01/07/2006 to 30/06/2007

01/07/2007 to 30/06/2008

01/07/2008 to 30/06/2009

01/07/2009 to 30/06/2010

01/07/2010 to 30/06/2011

01/07/2011 to 30/06/2012

01/07/2012 to 30/06/2013

The scheme commences on:

01/07/2006

Relevant facts and circumstances

    • On dd/mm/yyyy you signed an agreement to become a loan holder with an unrelated trust for the amount of $X.

    • Your agreement with the trust provided for interest payments to you of X% per annum, paid monthly.

    • Throughout the life of the agreement you only received two interest payments totalling $Y.

    • You also signed an agreement with the trust to package and distribute disinfectant. However, this arrangement never came to fruition and you did not package any disinfectant nor receive any income from the trust for this arrangement.

Relevant legislative provisions

Section 161 of the Income Tax Assessment Act 1936

Reasons for decision

Summary

The partnership is not required to lodge an income tax return as it's only was from interest derived jointly by the partners. Each partner should include their share of the interest income in their own individual income tax return.

Detailed reasoning

Subsection 161(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that;

    Every person must, if required by the Commissioner by notice published in the Gazette, give to the Commissioner a return for the year of income within the period specified in the notice.

The Gazette in which the notice is published has been replaced by a Legislative Instrument. The Legislative Instrument "Lodgment of returns for the year of income ended 30 June 2013 in accordance with the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997, the Taxation Administration Act 1953, the Superannuation Industry (Supervision) Act 1993 and the Income Tax (Transitional Provisions) Act 1997 (F2013L00925)" (2013 Legislative Instrument) governs the lodgment of income tax returns for the 2013 income year.

Law Administration Practice Statement PSLA 2011/15 Lodgment obligations, due dates and deferrals provides guidance on general and specific lodgement obligations.

You have advised that during the period the partnership was active its only activity was loaning $X to an unrelated trust. During the lifetime of this loan you derived interest income. You also signed a contract for the packaging of items of the trust, however this contract never came to fruition and you did not package any items or receive any income.

Paragraph 128 of PSLA 2011/15 provides the following;

    The Commissioner may grant an exemption from lodging a partnership return where:

    • The entity's only income is either rent from an investment property held by the individual partners as co-owners where they are not carrying on a business and/or interest derived jointly by the partners and each partner shows their share of the income and expenses in their own tax return.

As the only income earning activity carried on by the partnership was the derivation of interest income, then the partnership is not required to lodge a return and it is considered sufficient that the partners show their share of the interest income in their individual income tax returns.


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