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Assessment of Assets for Partnerships


Last updated: 1 June 2021

This topic provides information on the following:

  •       assessable asset amount,
  •       valuing the interest in a partnership,
  •       verification of asset value, and
  •       valuation of real estate.
Assessable asset amount

The amount to be taken into account for assets test purposes is the pensioner's interest in the partnership. Interest in the partnership is the amount that the pensioner would receive if the partnership were wound up, and depends on the:

  •       net value of the partnership assets,
  •       proportion of the net assets which the pensioner is entitled to receive, and
  •       net amounts contributed or withdrawn by the individual partners.    More ?
Valuing the interest in the partnership

The proprietors' funds in a partnership:

  • are calculated using the assets and liabilities shown in the financial accounts, and
  • reflect the capital contributions and drawings of each partner.

Note: Each partner's share of the partnership funds are shown in the financial accounts as Proprietors' funds.

Pensioner's share of the proprietors' funds

The pensioner's share of the proprietors' funds is the total of both fixed and current capital accounts in their name, and this can be obtained from the written partnership agreement and/or the latest balance sheet. An initial estimate of the pensioner's interest in the partnership is the amount shown on the balance sheet as:

  • their share of the proprietors' funds, and
  • any loans they have made to the partnership.

Note: If a balance sheet is not available, a list of all partnership assets and liabilities, including their current values, may be required.

Verification of asset value

The recorded value of fixed assets, other than real estate, can generally be accepted for valuation purposes. Using conventional accounting methods, fixed assets are recorded at historical cost, usually the purchase price less depreciation.    

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Valuation of real estate

The following table describes the requirements for valuation of real estate.    

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real estate is recorded on the balance sheet,

it must be assessed at its current market value and a valuation by a qualified valuation service provider may be necessary.

the real estate includes the pensioner's principal home and up to two hectares of adjacent private land,

the assessable value of the real estate is the value of the portion of the principal home and land that is used for commercial purposes. Any land exceeding the two hectares of adjacent land is assessable. A valuation by a qualified valuation service provider may be necessary.

the real estate includes the pensioner's principal home and all land on the same title     

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a valuation by a qualified valuation service provider may be necessary if the property includes titles other than the principal home title.

the assessable current market value of the real estate differs from the written down value,

the difference is shared between the partners and added to their recorded interests in the partnership.

Unless alternative arrangements are specified in the partnership agreement, the surplus or deficit on re-evaluation is allocated in the proportions in which each partner shares in the partnership.



An asset means any property, including property outside Australia.

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.

Drawings are the withdrawals of funds from a business by the proprietor during the financial year, and represent either a withdrawal of capital previously advanced to the business, or an advance on profits to be earned by the business.

The capital accounts of a business partnership record the capital contribution of each partner to the net assets of the partnership. The accounts may either:

  • fluctuate to record changes in the net assets, or
  • remain fixed in accordance with the partnership agreement.

If the capital accounts are fixed, a separate current account is kept for each partner. The partnership's current account then records the changes in the equity of each partner.

The market value of an asset is the point at which a willing purchaser and a willing, but not anxious vendor, would reach agreement.

The market value of an asset is only decreased by the value of an encumbrance secured against it. The market value of an asset is not reduced by any costs which may be incurred if the asset was to be sold.



The principal home has the meaning given by subsection 5LA(1) of the VEA and subsection 5LA(2) of the VEA. The principal home of a person is generally the place in which they reside. In certain circumstances, however, the principal home of a person can be the place in which they formerly resided. The following property is regarded as part of the principal home.

  • the residence itself (e.g. house, flat, caravan),
  • permanent fixtures (e.g. stoves, built-in heaters, dish-washers, light fittings and affixed carpets),
  • [glossary:curtilage:DEF/Curtilage] (i.e. two hectares or less of private land around the home where the private land use test has been satisfied, or all land held on the same title as the person's principal home where the extended land use test has been satisfied), or
  •       any garage, shed, tennis court or swimming pool used primarily for private purposes provided it is on the same title as the principal home.



4.9421 acres.

Private land is land of [glossary:two hectares:DEF/Two Hectares] or less, which is:

  • adjacent to the [glossary:principal home:DEF/Principal home], and
  • meets the [glossary:private land use test:DEF/Private land use test] as described in [glossary:subsection 5LA(3):] of the VEA.