Business, partnership and trust income

Income as an individual running a business

If you're an individual running a business (a sole trader), you must declare the income you earn from your business in your individual tax return.

The net income you receive from carrying on a business is assessable income. Business income includes cash and other forms of payment for goods or services you supply.

If you lodge:

• online with myTax, you report your business income by selecting  
  • You were a sole trader or had business income or losses, partnership or trust distributions (not from a managed fund)
  • Business/Sole trader income or loss
• by paper, you will need to complete the business and professional items schedule.

You don't need to lodge a separate tax return for your business.

If you’re an influencer or content creator, or have a side hustle, you may need to work out if you're in business. As a sole trader, you will still declare the income and deductions you earn from this work.

If you are in business as a sole trader, and also earn salary, wages, or other income from employment or commissions as an individual, your total taxable income is:

• your total assessable business income, plus
• the total assessable employment income.

This total income may affect the amount of repayments for income contingent loans like FEE-help, or offset eligibility and amounts.

Income or loss from a partnership

A partnership doesn't pay income tax but is required to lodge a partnership tax return each income year. A partnership carrying on a business distributes its net income or loss to each partner. Each partner includes their share of the net income of the partnership in their assessable income. Where a partnership makes a net loss in an income year, each partner may claim a deduction for their share of the partnership's loss.

Each partner in the partnership must lodge their individual tax return to declare their share of the partnership's net income or loss. The partner needs to do this whether or not they actually receive their share of the net income or loss.

However, a partnership must lodge a partnership tax return to report its:

• income
• deductions
• distribution of net income or net loss to the partners.

For capital gains tax (CGT) purposes, each partner owns a proportion of each CGT asset in the partnership.

If there is a CGT event (such as selling an asset), the individual partners calculate a capital gain or capital loss on their share of the asset.

If you lodge:

• online with myTax, you report your share of the partnership's income or loss by selecting  
  • You were a sole trader or had business income or losses, partnership or trust distributions (not from a managed fund)
  • Partnerships
• by paper, you will need to complete the supplementary tax return.

Income from a trust

If you're a beneficiary of a trust, you declare trust income to which you're entitled in your individual tax return. You need to do this even if you didn't actually receive your share of the net income from the trust.

However, you don't need to declare a trust distribution if family trust distribution tax has already been paid.

If you lodge:

• online with myTax, you report your share of the trust's income by selecting  
  • You were a sole trader or had business income or losses, partnership or trust distributions (not from a managed fund)
  • Trusts
• by paper, you will need to complete the supplementary tax return.

The trustee must lodge a trust tax return to report for the trust, but the trust itself generally doesn't pay income tax. However, the trustee may be required to pay income tax in some circumstances, such as if it has non-resident beneficiaries.