Income Tax - Partnership Flashcards
How is partnership tax calculated?
It is calculated very similar to Employment Income.
Commencement and cessation of trade treatment for new partners and old partners?q
New partners joining will be treated as commencing a new trade.
Old partners leaving will be treated as ceasing a trade.
What are the partnership loss reliefs for EXISTING partners and NEW partners?
EXISTING partners can claim terminal loss relief IF ONLY they are leaving the partnership.
New partner joining can claim the loss relief for the losses made for the last 4 years of trading.
HOW is the tax for partnerships calculated?
1st step is to calculate the profit apportionment for each partner.
2nd step is to calculate the Assessible Income for each partner with the Tax year, AP (assessible period) and AP (assessable profits). (New partners will have the first year rule, old partners will have the third year rule of taking the profits of the 12 months of accounting period and deducting overlap profit IF they are leaving).
