Private ruling: Partnership loss
Date of advice: 11 January 2016
Published: March 2016
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Question and answer | Are you entitled to claim your share of losses in relation to a partnership? | Yes.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You had a XX% share in a partnership overseas. You have incurred losses in relation to this partnership.

Relevant legislative provisions: Income Tax assessment Act 1997 section 8-1

Reasons for decision: Summary: The assessable income of a partner in a partnership includes the distribution of income or loss from the partnership in terms of section 92 of the ITAA 1936. The net income or loss of a partnership is calculated by deducting the allowable deductions attributable to the partnership from the assessable income attributable to the partnership. Subsection 92(2) of the ITAA 1936 provides that that where a partnership loss is incurred by a partnership in a year of income each partner in a partnership shall be allowed as a deduction their individual interest in the partnership loss. Deductions from income are allowable in terms of Section 8-1 of the ITAA 1997 for any loss or outgoing to the extent to that it is incurred in gaining or producing assessable income, or is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. However, you cannot deduct a loss or outgoing to the extent that it is a loss or outgoing, of a capital, private or domestic nature. In your case you had a XX% share in a partnership overseas. The partnership has incurred losses. You are able to claim your share of the losses in your Australian tax return in relation to the partnership.