Tax Planning Strategy 159 | Varying Partners Distributions
7 September 2017
Both common law partnerships and written partnership agreements allow the partners of a partnership to vary the amount a partner draws as a ‘partner salary’. To be effective for tax purposes in an income year, the agreement must be entered into before the end of that income year. The partner’s salary should be based on the individual partner’s participation and contribution to the partnership business.
The implementation process involves:
- Prior to 30th June review the individual partner’s contributions and consider whether their partner’s salaries should be revised.
- Document any changes in partners salaries in writing.
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