Tax reporting and tax rates

A partnership doesn’t pay income tax directly on the profit it earns. The profit is distributed to each partner according to the partnership agreement. If no formal partnership agreement exists then the profits are shared equally.

A partnership has a separate tax file number and will need to lodge a partnership tax return. The return details business income and expenses and who is entitled to what share of the partnership income or loss. 

Each partner must then declare their share of partnership income or loss in their respective individual income tax returns.

Partners in a partnership will pay tax at the ordinary individual tax rates and can apply the tax-free threshold. This means partners won’t have to pay tax on the first $18,200 earned. This is on all earnings, including any non-business income. 

Special rules apply to the income earned by individuals under 18. Certain types of this income may be taxed at higher rates.

Starting a small business

Steps Progress

Is my hobby a business?

9 mins

Business structures overview

5 mins

Business registrations

5 mins

Sole trader structure

7 mins

Partnership structure

10 mins

Company structure

13 mins

Trust structure

7 mins

Small business support

10 mins

Related courses

1 mins

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