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INCOME TAX ASSESSMENT ACT 1936

PART III - LIABILITY TO TAXATION  

Division 5 - Partnerships  

SECTION 92  INCOME AND DEDUCTIONS OF PARTNER  

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92(1)  

The assessable income of a partner in a partnership shall include:


(a) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was a resident; and


(b) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.

92(2)  

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Subject to section 830-45 of the Income Tax Assessment Act 1997, if a partnership loss is incurred by a partnership in a year of income, there shall be allowable as a deduction to a partner in the partnership:


(a) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was a resident; and


(b) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.

92(2AA)  

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However, if:


(a) the partner is a limited partner in a partnership; and


(b) the partnership is a VCLP, an ESVCLP, an AFOF or a VCMP during the year of income;
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the amount allowable under subsection (2), in respect of the year of income, as a deduction must not exceed the amount worked out as follows:

Method statement

Step 1. 

Work out the sum of the amounts that the partner has contributed (the partner's contribution) to the partnership.


Step 2. 

Subtract the sum of all the amounts (if any) of the partner's contribution that are repaid to the partner.


Step 3. 

Subtract the sum of all deductions allowed to the partner for losses of the partnership in previous years of income.


Step 4. 

Subtract the sum of the amounts of all the debt interests issued by the partner to the extent that they are secured by the partner's interest in the partnership.

Example:

A limited partner contributes $100,000 to a VCLP, having borrowed $80,000. Because the lender values the partner's interest in the partnership at $70,000, the partner also provides, as additional security, other assets valued at $10,000.

If none of the partner's contribution has been repaid and the partner has not been allowed deductions for partnership losses in previous years of income, the amount allowable to the partner for a partnership loss cannot exceed $30,000.

92(2A)  

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Subsection (2) does not apply to a partnership loss if the partner's interest in the partnership at the end of the year of income is:


(a) a segregated exempt asset (as defined in the Income Tax Assessment Act 1997) of a life assurance company; or


(b) a segregated current pension asset (as defined in the Income Tax Assessment Act 1997) of a complying superannuation fund.
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(c) (Repealed by No 58 of 2006).
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92(3)  

The exempt income of a partner in a partnership shall include:


(a) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and


(b) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.

92(4)  

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The non-assessable non-exempt income of a partner in a partnership shall include:


(a) so much of the individual interest of the partner in the non-assessable non-exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and


(b) so much of the individual interest of the partner in the non-assessable non-exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.


 



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