The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

1.1.C.04 Capital account of a business partnership


This definition applies to all payments.

Definition: capital account

The capital accounts of a business partnership records the capital contribution of each partner to the net assets of the partnership. The accounts may either:

  • fluctuate to record changes in the net assets, OR
  • remain fixed in accordance with the partnership agreement.

If the capital accounts are FIXED, a separate current account is kept for each partner. The partnership's current account then records the changes in the equity of each partner.

Example: Changes in equity can be caused by profit or loss, drawings, interest on capital and interest on drawings.

The total of a partner's capital account is the RECORDED net asset value of the business. This is worked out by:

  • the book value, MINUS
  • liabilities.

Explanation: The CURRENT asset value of a business is seldom equal to the RECORDED net asset value of the business because of the liabilities most businesses have.

Definition: assets

For the purposes of capital accounts, assets include the partnership's:

  • real estate
  • equipment, and
  • livestock.

Policy reference: SS Guide Assessment of Assets for Partnerships

Last reviewed: