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Partnership Law Act 2019

Nature of partnership - Determining whether partnership exists

14: Effect of receiving share of profits

You could also call this:

"Getting profits doesn't always mean you're a business partner"

When you get a share of the profits from a business, people usually think you're a partner in that business. But this isn't always true. Just because you get some of the profits doesn't automatically make you a partner. The same goes for if you get paid based on how well the business does. These things alone don't make you a partner. There might be other reasons why you're getting money from the business. If you want to know more about this, you can look at section 15 of the law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS205994.

Topics:
Business > Industry rules
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13: Sharing gross returns, or

"Splitting money or stuff you earn doesn't always mean you're partners"

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15: Where receiving profits or payments does not make person partner or liable as partner, or

"Getting money from a business doesn't always make you a partner"

Part 2Nature of partnership
Determining whether partnership exists

14Effect of receiving share of profits

  1. If a person receives a share of the profits of a business it is presumed, in the absence of evidence to the contrary, that the person is a partner in the business.

  2. However, neither of the following by itself makes a person a partner in a business:

  3. the receipt by the person of a share of the profits of the business:
    1. the receipt by the person of a payment that is contingent on, or varies with, the profits of the business.

      1. See, in particular, section 15.

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