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Income Tax Act 2007

Taxation of certain entities - Joint venturers, partners, and partnerships

HG 3: General provisions relating to disposals

You could also call this:

“Rules for when a business partnership ends or changes”

When a partnership is finally dissolved, some rules do not apply to the partners. This happens when the partnership is ended by agreement, court order, or other means and the business will not continue as a partnership, ignoring section HG 2. You need to know that the partnership’s situation affects which rules apply.

Some rules, like sections HG 5 to HG 9, do not apply to partners of a small partnership if they all furnish returns of income that ignore these sections. If you are an entering partner, section HG 10 applies if you furnish a return of income that applies this section. This means you must follow the rules that apply to your situation.

You should be aware that there are specific rules for different situations, and it is essential to understand which ones apply to you. If you are part of a partnership, you need to know how the rules affect you when the partnership ends or when you join or leave a partnership. The rules can be different depending on whether you are an entering partner or part of a small partnership.

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" Partnerships are treated as see-through for tax purposes "

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HG 4: Disposal upon final dissolution, or

"Selling your share of a partnership when it ends"

Part H Taxation of certain entities
Joint venturers, partners, and partnerships

HG 3General provisions relating to disposals

  1. Sections HG 5 to HG 10 do not apply for the partners of a partnership when the partnership is finally dissolved by agreement of the partners, court order, or otherwise and the partnership’s business, ignoring section HG 2, will not continue to be carried on in partnership.

  2. Sections HG 5 to HG 9 do not apply for the partners of a small partnership if the entering partner, the exiting partner, and the partnership, furnish returns of income that ignore the sections.

  3. Section HG 10 applies for an entering partner if the entering partner furnishes a return of income that applies the section.

Notes
  • Section HG 3: inserted, on , by section 19(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
  • Section HG 3(1) heading: replaced (with effect on 1 April 2008), on , by section 76(1) (and see section 76(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section HG 3(1): replaced (with effect on 1 April 2008), on , by section 76(1) (and see section 76(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section HG 3(2): amended (with effect on 1 April 2008), on , by section 269(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section HG 3(3) heading: substituted (with effect on 1 April 2008), on , by section 269(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section HG 3(3): substituted (with effect on 1 April 2008), on , by section 269(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section HG 3 list of defined terms entering partner: inserted (with effect on 1 April 2008), on , by section 62 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
  • Section HG 3 list of defined terms exiting partner: inserted (with effect on 1 April 2008), on , by section 76(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section HG 3 list of defined terms exiting partner: repealed, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
  • Section HG 3 list of defined terms partner: inserted (with effect on 1 April 2008), on , by section 62 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
  • Section HG 3 list of defined terms partnership: inserted (with effect on 1 April 2008), on , by section 62 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
  • Section HG 3 list of defined terms return of income: inserted (with effect on 1 April 2008), on , by section 62 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
  • Section HG 3 list of defined terms small partnership: inserted (with effect on 1 April 2008), on , by section 62 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).