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Assessable Income for Partnerships Only




This topic provides information on the following items that relate to partnerships only:

  •       assessable income for partnerships, and
  •       partnership salaries.
Assessable income for partnerships

Assessable income is the pensioner's share of the gross income of the partnership, less allowable deductions. If the partnership makes a loss, the loss cannot be offset against income from unrelated sources.

Partnership salaries

Any salary paid by a partnership to one or more of the partners, is an allowable business deduction for income test purposes. The following table describes how salary paid to a partner, who is a pensioner, is treated for the income tests.

If salary is paid to a pensioner...


and the partnership makes a profit

the salary is added to the pensioner's profits from the partnership to determine their business income.

and the partnership makes a net loss

the partner's share of the loss can be offset against any salary paid to them by the partnership.

For example, if the pensioner's salary is $6,000 and their share of the partnership loss is $3,500, then their assessable income is $2,500.

For the purposes of income and assets assessment, a partnership is the relationship which exists between people carrying on business in common, with a view to making a profit. A partnership agreement may be oral OR written. The business may be run:

  •       in the owners' name(s), or
  •       under a registered business name.

The business is not a separate legal entity, which means that although the partnership lodges a tax return, the profit or income is assessable in the hands of the individual partners.

Each partner:

  •       owns an agreed portion of the business assets,
  •       receives an agreed portion of the profits, and
  •       is 'jointly and severally' liable for all business debts.

According to section 5H of the VEA income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.



Profit, for a business, is the amount of earnings in excess of its expenses over 12 months.