General Provisions for Sole Traders and Partnerships

Last amended 25 August 2008

This topic provides information on the following:

• differences between sole traders and partnerships for the purposes of income and assets testing,
• when a pensioner is operating a business, and
• identifying business income.

Assessable income and assets for sole traders and partnerships

Assessable income and assets for sole traders and partnerships are almost identical, except that:

• sole traders receive all of the income from their business, either as wages or profit, and
• partners in a business only receive an agreed portion of the profit from the business, as determined by the partnership agreement.

Operating a business as a sole trader or partnership

The provisions in this topic are only concerned with sole traders and partners who are operating a business. The following table describes when a pensioner is considered to be operating a business.

Income from a business

Income from a sole trader or partnership business is the net amount:

• after allowable expenses for the cost of running the business, and
• before income tax and other personal deductions.

For assessment purposes the current annual rate of income is used, generally based on the most recent taxation return.     

Annual Reviews and Date of Effect

Income from sole traders and partnerships is usually assessed annually, when income tax returns or completed financial statements are provided to the Department, with the date of effect of a pension reassessment based on the date this evidence of earnings is received.