1. I started a partnership business with my brother and our first accounts closed on 31 March 2015. How should I report my share of the profits of the partnership to the Inland Revenue Department?
For Profits Tax purposes, a partnership is treated as a separate legal “person”. As such, the assessable profits of a partnership are calculated as a single amount and the tax in respect of the profits is charged in the name of the partnership (but not charged to your or your brother's individual name).
The precedent partner of the partnership should complete for the partnership a “Profits Tax Return – Persons Other Than Corporations” (B.I.R.52) for the year of assessment 2014/15.
The “net profits” shown in the accounts of the business have to be converted into its "assessable profits" and declared in B.I.R.52.
Normally, a Profits Tax Assessment would be raised on the partnership at the Standard Rate of Tax. However, if Personal Assessment is elected, the partners' tax liabilities may be reduced.
Where it is apparent that a partner will obtain a tax advantage by electing Personal Assessment, Profits Tax is not, in practice, charged on his/her share of assessable profits from the partnership (tax is separately charged under Personal Assessment). Nor is Provisional Profits Tax charged on that portion of assessable profits from the partnership.