Part H
Taxation of certain entities
Joint venturers, partners, and partnerships
HG 6Disposal of trading stock
This section applies when a person
disposes of some or all of their partner’s interests in a partnership, to the extent to which those interests include trading stock that is not livestock, and, for the income year of disposal, the total turnover of the partnership, ignoring section HG 2, is $3,000,000 or less.The amount of consideration paid or payable to the exiting partner for the trading stock is excluded income of the exiting partner.
The exiting partner is denied any deduction in relation to the trading stock for the income year in which the disposal of the trading stock occurs and later income years, to the extent to which the entering partner is allowed a deduction because of subsection (5).
The entering partner is denied any deduction for the amount of consideration paid or payable to the exiting partner for the trading stock.
For the purposes of calculating the income tax liability of an entering partner, the entering partner is treated as if they had acquired and held the trading stock, not the exiting partner.
This section does not apply for the partners of a small partnership if section HG 3(2) applies.
Section HG 4 overrides this section.
Notes
- Section HG 6: inserted, on , by section 19(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
- Section HG 6(1): amended, on , by section 135(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
- Section HG 6(6): amended (with effect on 1 April 2008), on , by section 272(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
- Section HG 6 list of defined terms exiting partner: inserted, on , by section 135(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).