Statements of distribution (SODs) must be lodged for all partnerships. Accurate and timely completion of these enables us to data match and assess if partners have returned their partnership income correctly. Incomplete or incorrect statements may result in partners being unnecessarily subjected to compliance activities.
Our recent analysis and compliance activities have identified basic errors tax practitioners make with SODs. To avoid these mistakes, make sure you’ve gathered the necessary lodgment information before preparing SODs, and complete all required information for each partner in the SOD labels, including:
- the name of each individual or entity
- tax file numbers
- residential or business addresses
- date of birth for individuals
- Australian business numbers for other entities.
SOD data helps us cross-check and assure that partners are correctly reporting their income in their income tax returns. This is even more important with our increased focus on compliance with Practical Compliance Guideline PCG 2021/4 Allocation of Professional firm profits – ATO compliance approach. It also helps us target our compliance actions more accurately.
We strongly recommend digital lodgment of SODs. For partnerships of up to 160 partners, you can already lodge digitally through your lodgment software (Practitioner lodgment service and Standard Business Reporting-enabled software). From 1 July, you’ll be able to digitally lodge 2024–25 and future returns for all partnerships, including those with more than 160 partners. We’ll provide more information on this change closer to that date.