18.104.22.168 General Provisions for Sole Traders & Partnerships
This topic provides information on the following:
- assessable income and assets for sole traders (1.1.S.225) and partnerships (1.1.P.95),
- operating a business as a sole trader or partnership,
- assessment of business income, and
- GST interaction with income from a business.
Assessable income & assets for sole traders & partnerships
Assessable income and assets for sole traders and partnerships are almost identical, except that:
- sole traders receive ALL of the income from their business, either as wages or profit (1.1.P.428), and
- partners in a business ONLY receive an agreed portion of the profit from the business, as determined by the partner.
Operating a business as a sole trader or partnership
The provisions in this topic are only concerned with sole traders and partners who are operating a business. The following table describes when a person is considered to be operating a business.
|If the person…||Then they are…|
|is carrying on a trade, occupation or profession as an on-going concern,||operating a business.|
|obtains rent from:
||NOT operating a business, but are obtaining income from a profit making transaction.
Explanation: The income assessed is the profit from the transaction, after taking into account the expenses incurred in obtaining the income.
Act reference: SSAct section 8(1) Income test definitions
Assessment of business income
For information on this topic refer to 22.214.171.124.
GST interaction with income from a business
For information on this topic refer to 126.96.36.199.