These instructions will help you complete the Partnership tax return 2017. 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?
Expanding accelerated depreciation for small businesses
New laws have passed that allow small businesses to claim an immediate deduction for assets they first acquire and start to use, or have installed ready for use, provided each depreciable asset costs less than $20,000. This will temporarily replace the previous instant asset write-off threshold of $1,000.
This measure started 7.30pm (AEST) 12 May 2015 and will end on 30 June 2017.
The balance of the general small business pool is also immediately deductible if the balance is less than $20,000 at the end of an income year that ends on or after 12 May 2015 and on or before 30 June 2017 (including an existing general small business pool).
The 'lock out' laws have also been suspended for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they have opted out) until the end of 30 June 2017.
In the 2017 Budget, the government announced its intention to extend the end date of this measure to 30 June 2018.
At the time of publishing, this change had not yet become law.
Expanded access to small business concessions
From 1 July 2016, the small business entity aggregated turnover threshold for a range of small business concessions increased from $2 million to $10 million.
The $10 million aggregated turnover threshold applies to most of the small business concessions, except for:
- the small business income tax offset, which is available to businesses with aggregated turnover of less than $5 million from 1 July 2016 (claimed by individual partners)
- capital gains tax (CGT) concessions for small business, where the aggregated turnover threshold of $2 million continues to apply.
- The aggregated turnover threshold for the fringe benefits tax concessions increases to $10 million from 1 April 2017.
Small business income tax offset
A partner who is an individual may be entitled to a tax offset on the tax payable on their share of net small business income earned by a partnership that is a small business entity.
From 1 July 2016:
- the small business income tax offset increased to 8%, previously 5%, with a limit of $1,000 each year
- the offset applies to small businesses with aggregated turnover of less than $5 million (previously $2 million).
Early stage venture capital limited partnership tax offset
From 1 July 2016, a limited partner of an early stage venture capital limited partnership (ESVCLP) may qualify for:
- a non-refundable carry forward tax offset of up to 10% of their contribution to an ESVCLP. The ESVCLP must have become unconditionally registered on or after 7 December 2015. This includes an ESVCLP that was conditionally registered before this time and then became unconditionally registered on or after 7 December 2015.
- a tax exemption for part of the capital gain or income from the disposal of investments that accrued to the end of the period ending six months after the end of an income year in which the investee’s value has first exceeded $250 million.
Partners must claim the tax incentives in their own tax returns
See also:
Early stage investor tax incentives
From 1 July 2016, investors who acquire newly issued shares in an eligible early stage innovation company may qualify for:
- a tax offset equal to 20% of the amount paid for the shares. This tax offset is capped at a maximum amount of $200,000 for each income year for the investor and their affiliates combined where the requirements of the 'sophisticated investor' test under the Corporations Act 2001 are met for at least one of the investments made in an eligible early stage innovation company. The offset is not refundable, but can be carried forward to the next income year. (If the investor does not meet the requirements of the sophisticated investor test the total amount of the offset must not exceed $10,000.)
- a modified CGT treatment under which the investor can disregard any capital gains made on the shares that have been continuously held for between one and ten years. Any capital losses on the shares held for less than ten years must be disregarded.
Partners must claim the tax incentives in their own tax returns.
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Significant global entity (SGE)
The significant global entity (SGE) concept is used to give clarity to taxpayers about whether they are within the scope of the measures to which the definition applies.
The concept of SGE was introduced as part of the Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 legislation which contains a package of measures announced as part of the 2015-16 Budget. These measures focus on combating multinational tax avoidance.
An entity is a SGE if it is:
- a global parent entity whose annual global income is A$1 billion or more, or
- a member of a group of entities that are consolidated for accounting purposes as a single group and one of the other members of the group is a global parent entity whose annual global income is A$1 billion or more.
An SGE can be an entity in a group that only has operations in Australia, including those that are privately owned.
To assist in identifying SGEs, from the 2016–17 income year and going forward, taxpayers will be required to self-assess themselves under the definition of a SGE and notify the tax office on their annual partnership tax return at 'Status of business' (item 2, G1).
The SGE concept is part of the following measures:
- The Multinational Anti-Avoidance Law (MAAL)
- General Purpose Financial Statement (GPFS)
- Country-by-Country (CbC) Reporting
- Increased administrative penalties for SGEs.
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