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Can one partner be assigned 0% of profits in a family partnership?

Discussion in 'Accounting, Tax & Legal' started by Skyblues, 9th Nov, 2011.

  1. Skyblues

    Skyblues Member

    Joined:
    7th Nov, 2011
    Posts:
    5
    Location:
    Adelaide
    Hi,
    My other thread 'Discretionary trust or family partnership with my fiance' still has not received any answers, so want to ask a quick question that will help me keep going...

    In short, can one partner be assigned 0% or 1% of profits in a family partnership? We aim to establish an importing/e-commerce business in the 1st quarter of 2012, while keeping our day jobs and my partner is a low income earner...For income distribution/taxation benefits, can you establish a family partnership and assign one partner - me 0% or 1% of profits and her 100% of the business profits - in order to distribute the income tax-effectively?

    Please see my questions about whether doing all this will be better in a Discretionary Trust in the other thread - if you will suggest a Discretionary Trust instead...

    Thanks...
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    It wouldn't be much of a partnership then.
     
  3. somebodyhere

    somebodyhere Member

    Joined:
    11th Sep, 2009
    Posts:
    13
    Location:
    Sydney, NSW
    Yes you can assign 1 partner 0% or 1%, but it may look suss if you change the percentage from year to year.

    I would suggest establishing a discretionary trust with yourself as the trustee. There is only a one-off cost of a few hundred $$ and no yearly fees (if you use a company as a trustee then there will be an annual company fee). With a trust it's definitely possible to vary the profit distributions each year.

    Hope this helps.