Tax and Structures

Comparison of all entities

Tax for partnership

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 2022/23 is shown in the table opposite.

Both partners have to pay tax of $1,432 each, being a total of $2,864.

This tax is $9,376 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 income tax offset.