These instructions will help you complete the Partnership tax return 2013. They are not a guide to income tax law. You may need to refer to other publications.
When we say ‘you’ or ‘your business’ in these instructions, we mean either you as the partnership that conducts a business or you as the registered tax agent or partner responsible for completing the tax return.
These instructions contain abbreviations for names or technical terms. Each term is spelt out in full the first time it is used and there is a list of abbreviations.
What’s new?
We have reviewed the company, trust and partnership income tax returns and some associated schedules in an effort to balance the cost of compliance to taxpayers and the ATO’s information needs. We identified opportunities to refine the information we collect, and have made the following changes to the Partnership tax return 2013:
- The following items have been removed:
- tax file number (TFN) of former partnership
- item 5 label A – Gross payments subject to foreign resident withholding (Primary Production)
- item 5 – Foreign resident withholding expenses (primary production)
- item 17 – Forestry management investment scheme ruling details
- item 36 label K – Proprietors’ funds
- item 52 label F – Small business and general business tax break
- item 54 – Interest expenses overseas
- item 55 – Royalty expenses overseas
- item 57, label V – Deduction for environmental protection expenses
- item 61 – Entrepreneurs tax offset.
- Item 29 – Overseas transactions has replaced items 54 and 55.
- The Personal Services Income schedule and the Capital Allowances schedule have been decommissioned. This information is now collected at item 30 – Personal services income and item 47 – Capital allowances.
Conservation tillage refundable tax offset
The government has introduced a refundable tax offset for purchase of an eligible no-till seeder (‘eligible seeder’) used in conservation tillage farming practices. Qualifying primary producers may be entitled to a refundable tax offset of 15% of the cost of an eligible seeder. The refundable tax offset is only available for eligible seeders installed ready for use between 1 July 2012 and 30 June 2015.
No claims for the offset are made in the partnership return. Where eligible, each partner will claim the offset in the partner’s tax return for the year. The offset claim will be made in accordance with the partner’s share of the partnership in the proportions agreed by the partners.
For more information, see Conservation tillage refundable tax offset.
Entrepreneurs Tax Offset
As part of the May 2011 Federal Budget announcements, the government has abolished the Entrepreneurs tax offset from the 2012–13 income year onwards.
This question has been removed from the Partnership tax return 2013.
Related party debt and Limited recourse debt
As part of the May Federal Budget, the government announced its intention to amend the law to provide a more consistent tax treatment for bad debts between related parties, irrespective of whether they are members of a tax consolidated group. The measure will ensure that where the debtor and creditor are related parties, and a corresponding debt is terminated (written-off) or forgiven after 7.30pm on 8 May 2012:
- the creditor will be denied tax relief for the bad debt written-off, and
- the corresponding gain to the debtor will not be taxed.
This will affect entities that are related parties but are not wholly within the same tax consolidated group.
The limited recourse debt provisions will also be clarified. This will ensure tax deductions are not available for capital expenditure on assets that have been financed by limited recourse debt, to the extent that the taxpayer is not effectively at risk for the expenditure and does not make an economic loss.
At the time of publication these changes had not become law. For more information, see Bad debts: Ensuring a consistent treatment in related financing arrangements.
Repeal of foreign investment fund and deemed present entitlement rules
The Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010 repealed section 96A, Part XI (the FIF rules) and sections 96B and 96C (the deemed present entitlement rules) of the Income Tax Assessment Act 1936 (ITAA 1936). The repeal is applicable to the 2010–11 year of income and later years of income. In the absence of the FIF and deemed present entitlement rules, resident beneficiaries holding interests in foreign trusts will need to turn to the ordinary trust rules contained in Division 6 and the transferor trust provisions in Division 6AAA of the ITAA 1936 in order to determine their tax obligations. The ordinary trust rules will also continue to apply in precedence to the transferor trust rules.
Reforms to income tests
In the 2008 Federal Budget the Government announced measures to reform income tests across the tax and benefit systems. These measures will help to ensure Government assistance is targeted to those most in need. The measures also remove inconsistencies in the treatment of non-wage remuneration and ensure net losses from investment activities are better accounted for in income tests. The reforms to income tests measure took effect on 1 July 2009.
Questions in the partnership tax return will determine each partner’s share of net financial investment income or loss and net rental property income or loss. If partners have these amounts, they will need to include them when completing the net financial investment loss and net rental property loss items in their own income tax return.
See Income tests: an overview for more information.