Private ruling: eductibility of partnership expenses after cessation
Date of advice: 15 January 2020
Published: March 2020
Ruling period: Years ending 30 June 20XX | Years ending 30 June 20XX | Years ending 30 June 20XX | Years ending 30 June 20XX | Years ending 30 June 20XX

Ruling: Q1: Can the partnership claim a deduction under 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the unclaimed input tax credits? | A1: Yes. Section 27-20 of the ITAA 1997, provides the calculating amount you may be able to deduct under 8-1 of the ITAA 1997, for the business related expenses, whilst the partnership was in existence for the unclaimed input tax credits. The calculating amount that could be deductible is as follows: (a) an element in the calculation that is an amount paid or payable is treated as not including an amount equal to any input tax credit for an acquisition related to the amount paid or payable, or any decreasing adjustment related to that amount; and (b) an element in the calculation that is an amount received or receivable is treated as not including an amount equal to any GST payable on a taxable supply related to the amount received or receivable, or any increasing adjustment related to that amount. Therefore, the partnership is able to deduct the allowable unclaimed input tax credits under 8-1 of the ITAA 1997.

Relevant facts and circumstances: You were co-owners of property blocks and formed a partnership. The partnership was registered for GST and was conducting an enterprise. The partnership made creditable acquisitions. The partnership accounted for GST on a quarterly basis. All of the partnerships input taxed credits were attributable to specified tax periods. The partnership made taxable supplies and was liable to pay the GST payable on those taxable supplies. The partnership has lodged all outstanding business activity statements. The partnership is not entitled to input tax credits, as the Commissioner was not notified of the entitlement within four years. The partnership has lodged nil BASs for the periods for other particular periods. The partnership is not entitled to the input tax credits and has incurred the amounts in deriving assessable income.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 27-5 | Income Tax Assessment Act 1997 section 27-20