Business structures

Your business structure may affect your and your partner’s payments from us.

Business types

Business partnerships

This is a business that 2 or more partners own. A partner can be a person or a business structure like a company or a trust. Each partner owns an agreed part of the business assets and profits.

The business can trade under the business partners’ names or a registered business name.

A business partnership has the following characteristics:

  • it's not incorporated like a company
  • has a partnership agreement that sets out its rights and obligations, which can be in writing, verbal or implied.

The partners have unlimited liability. This means both:

  • partners are personally liable for all the business debts
  • if 1 business partner doesn’t pay their share of a debt, the others must pay it.

Sole trader or self employed

A sole trader is someone who’s self employed. You’re a sole trader if you either:

  • own and run a business on your own
  • choose when, where, how and who you work for.

As a sole trader all of the following apply:

  • you’ll only need to lodge a personal tax return
  • you own all the assets of the business
  • all business profits are yours
  • you’re responsible for all business debts.

You can trade under your own name or a registered business name.

Business assets and income

Any personal or business assets or income can affect your payments from us.

Being in business includes being either:

  • a business partner
  • a sole trader
  • self employed.

You need to tell us about all of the following:

  • income you earn from being in business, including JobKeeper payments
  • income your partner earns from being in business
  • assets you or your business own
  • assets your partner or their business owns.

You should also give us a copy of your personal and business income tax returns and financial statements each year.

There are 4 types of financial statements:

  • profit and loss statement
  • balance sheet
  • depreciation schedule
  • notes to the accounts.

Once these are ready you have 14 days to give us a copy. To do this you can either:

If you don’t give us this information we may not pay you the right amount.

You have 14 days from the date of change to tell us if your business income or assets change significantly. A significant change is anything that changes your net profit or net asset situation, like winning or losing a contract.

To tell us about these changes you can either:

  • call us
  • send us a letter.

Assets

In your assets test we include your share of the net assets of the business. To get this amount we add up the current market value of your share of all business assets. We then subtract your total share of the allowable business liabilities.

If you’re a sole trader

If you’re a sole trader, assets can include your personal assets used for the business as well as business assets.

Liabilities

Your financial statement tells us what these are.

We don’t subtract all liabilities. For example, we exempt liabilities secured against the main home of members of the partnership.

Business income

In your income test we include your share of the business income. To get this figure we look at your personal income tax, and if there is one, the partnership income tax return. We then add back any non-allowable deductions.

Deductions

You can only claim depreciation for the time when you own the asset and the business is using it. Your depreciation schedule shows how long the business used the asset as a percentage of the time you owned it.

We don’t allow all the deductions you can claim in your tax return. This is because social security law and tax law are different.

We allow all of the following deductions under social security law:

  • costs needed to earn business income
  • depreciation of business assets you can claim under Division 40 of the Income Tax Assessment Act 1997
  • employee superannuation.

To claim depreciation of business assets under Division 40 of the Income Tax Assessment Act 1997 you’ll need a depreciation schedule.

We don’t include any of the following deductions under social security law:

  • prior year losses
  • offset losses from other businesses
  • superannuation for sole traders or business partners
  • some capital costs
  • donations
  • borrowing costs
  • entertainment
  • amortisation of intangible assets
  • private health insurance premiums
  • personal life insurance premiums
  • depreciation claimed under the small business entity concessions included in Subdivision 328-D of the Income Tax Assessment Act 1997
  • instant asset write-offs claimed under the small business entity concessions included in Subdivision 328-D of the Income Tax Assessment Act 1997.

Documents we need from you

We’ll need some documents from you if you’re in a business. We’ll also need these from your partner if they’re in business.

If you’re in a business partnership

We’ll need all of the following documents from you and your partner:

  • the Business Details form
  • a copy of your partnership agreement
  • your most recent partnership tax return
  • your most recent personal income tax return
  • your most recent profit and loss statement or income statement
  • your most recent balance sheet
  • your most recent depreciation schedule
  • your most recent livestock trading account if you have one.

To claim depreciation of business assets under Division 40 of the Income Tax Assessment Act 1997 you’ll need a depreciation schedule.

If you’re a sole trader

We’ll need all of the following documents from you:

  • the Business Details form
  • your most recent personal tax return
  • your most recent profit and loss statement or income statement
  • your most recent balance sheet
  • your most recent depreciation schedule
  • your most recent livestock trading account if you have one.

Page last updated: 26 June 2020