Partnership business taxation – Experts insights on filing income tax returns
For small, medium, and large enterprises, tax accountants are readily available to disburse their services. They are equipped with comprehensive knowledge about tax rates and slabs applicable to businesses. However, the term partnership in businesses is often missed when it comes to discussing tax liabilities. Hence, Kirpa Tax Accounting is rendering its taxation services in Craigieburn to partnership firms. In Australia, the tax is levied on the individual incomes of partners and what they have earned from profits. A partnership business is required to lodge a tax return each income year but doesn’t pay tax. So, this tax regimen requires careful assessment of the partners’ income share.
What is a partnership business?
A partnership or corporation is a joint venture where two or more people agree to earn profits. This business structure is widely applied to SMEs and large Aussie enterprises. Tax accountants can efficiently manage tax-related aspects of a partnership to create significant tax-saving opportunities. It involves the filing of partnership tax return Craigieburn based on income earned by individual partners. Also, each partner can claim tax deductions in case the business shows a loss in the income year. However, filing a tax return for this business is necessary to disclose net income, deductions, and distribution of income or loss.
How is partnership business taxed?
The taxes of partnership are not double-taxed in any way as the tax is computed on individual incomes. So, this tax is computed and the return is filed in two ways mentioned below.
- Taxes on partners’ income
Partnership alone does not exist as an entity but as a mutual relationship to share profit. So, the income is taxed on the partner’s level. Thus, we assess income for each partner to compute the taxable income. It involves the reviewing of statements from the partnership stating the portion of income, credits, and expenses. Our Craigieburn taxation services for partnerships simplify the process by preparing statements for managing the tax affairs of partners.
Partnership return filing
However, the partnership doesn’t have an individual entity, unlike a sole trading firm. But still, it needs TFN and ABN to file the Craigieburn partnership tax return annually mandated by ATO. So, the tax is computed based on the partnership agreement among the partners. The partnership tax filing is processed through cloud accounting to track the income and expenses of partners. Partnership firms must register for GST if the annual turnover exceeds AUD 75k.
The final words
In the partnership scenario, each partner is allowed to deal with individual tax profiles on personal income. If the income is shared as profit, tax is applied to income earned. Also, partners can claim for deductions in case of loss incurred. Therefore, preparing taxes and aligning partnership accounts is necessary. So, hire Kirpa Tax Accounting for precise and efficient taxation services in Craigieburn for a partnership firm. We streamline your tax-related processes and ensure you have a smooth filing of tax to ATO with a clean record.