Knowledge Base

Business Structures

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A partnership at common law is not a separate legal entity. Two or more people, or entities, can enter into an agreement either verbally or under contract to enter into a business and share in the risks and profits. Partners are jointly and severely liable for debts and litigations of the partnership.


  • A partnership agreement should be in place
  • May require a company to act as agent
  • Use of any business name should be registered
  • May require registration for TFN, ABN, GST and/or PAYG


  • Relatively inexpensive to establish
  • Ability for income splitting between partners
  • Partners may obtain 50% CGT discount
  • Small business CGT concessions easily obtained
  • Partnership losses distributed to partners to be offset against other income
  • Individual partners’ benefits not subject to FBT
  • Any entity can be a partner


  • The partners are jointly and severely liable
  • Distributions from partnership must be in proportion to ownership
  • Changes in partners will have CGT consequences
  • Partners cannot be employed by the partnership for salary packaging purposes
  • Income cannot be accumulated in the partnership

To learn about the other business structures available in Australia click the links on the right hand menu.

This document contains general advice only and is prepared without taking into account your particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should speak to a licensed financial advisor who should assess its relevance to your individual circumstances. While The Field Group believes the information is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the corporations Act 2001.

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