Private ruling: Lodgment of partnership tax return
Date of advice: 18 August 2016
Published: September 2016
Ruling period: Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2014

Ruling: Q1: Will the Commissioner grant an exemption from lodging partnership returns? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1936 - section 91 | Income Tax Assessment Act 1936 - section 161

Reasons for decision: Summary: Exemptions from lodgment are generally only provided in exceptional circumstances. In accordance with subsection 161(1) of the Income Tax Assessment Act 1936 (ITAA 1936), each year the Commissioner publishes a legislative instrument setting out who is required to lodge. Table K of the Lodgment Legislative Instrument for each relevant year requires that a partnership return be furnished by the partner/s resident in Australia. This requirement is in accordance with section 91 of the ITAA 1936 which states that, although partnerships are not liable to pay income tax, they are required to furnish an income tax return. Paragraph 130 of the PS LA 2011/15, Lodgment obligations, due dates and deferrals refers to the exemption information within the tax agent lodgment program instructions for partnerships (the instructions) for the relevant income year. In reviewing these instructions, together with the facts you have provided, we conclude that the circumstances of the partnership do not create exceptional circumstances to preclude the partnership from the requirement to lodge. Therefore the partnership is not exempt from lodging income tax returns. As the partnership has at least one Australian resident partner (who became an Australian resident from early 20XX), it is required to lodge a partnership return for the income tax years 20XX, 20YY, 20ZZ and has a continuing obligation to lodge income tax returns.

Relevant facts: The partnership was formed in the overseas and solely operates overseas, generating all income from foreign sources. | Central management and control is also overseas. | The initial partners were both non-residents when the partnership was formed and held equal interests in the partnership. | In early 20XX, partner A returned to Australia and became an Australian resident for tax purposes. Partner A's share of the partnership income has been declared as foreign source income in their individual returns. | In mid 20YY, a new partnership was formed for the same business to allow a new partner, (non-resident), to enter with a share and also the balance of the individual ownership to discretionary trusts. | Partner A's remaining share was transferred to their discretionary trust, and Partner B's remaining share was transferred to a non-resident trust. | Both trusts currently lodge Australian tax returns and will report their share of the partnership income