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Partnerships are a common and relatively straightforward form of business structure. The general taxation rules dealing with partnerships are contained in div 5 of pt III ITAA36 (ss 90–94). Division 5 ensures that while partnership income and losses are calculated at the partnership entity level, a partnership does not actually pay any tax. Instead, the income and losses ‘flow through’ to the partners based on their respective interests in the partnership. This ensures that it is the individual partners (rather than the partnership) that are the relevant taxpayers.
This chapter examines the nature of a partnership and focuses on the way that the partnership taxation rules in div 5 operate. It also considers how the tax law deals with certain kinds of partnership dealings (eg variations in the constitution of partnerships) and how the CGT regime applies to partnership assets and assignments of interests in partnerships.
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