The income for each individual in a two-person partnership for investment purposes is half of the net income of the partnership.
Therefore, in the example the taxable income for each partner is $40,250 which is half of $80,500. They also receive a franking credit of $3,000 each.
The calculation of tax for each individual in 2021/22 is shown in the table opposite.
Both partners have to pay tax of $933 each, being a total of $1,866.
This tax is $9,294 lower than for the individual in the previous example as the partners are able to split their incomes.
The benefit occurs because each partner is able to access the $18,200 tax-free amount as well as lower marginal tax rates and the low and low and middle income tax offset.