Tax Strategy: Husband and Wife Partnerships

In a typical husband and wife partnership, one partner is qualified (for example an electrician) and produces the partnership income and the other partner may be involved in administration for the partnership.

Profits from the partnership are normally split 50/50 between the partners. This structure was reviewed by the ATO in 2005 in their ‘Refocus of the income-splitting test case programme’ and accepted as legitimate because both partners are exposed to the liability for the partnership debts, so both should share the rewards.

Tradespeople using husband and wife partnerships can generate substantial tax savings where one spouse has low or no other income.

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Please Note: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Copyright © 2018 Robert Bauman

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