Business structures

Your business arrangement may affect your or your partner’s payment.

Types of business

Business partnership

A business partnership is a business operation that involves 2 or more people. The business partners may be individuals or other business structures, like a company or a trust.

Unlike a company, a business partnership is not incorporated. The rights and obligations of the business partnership are governed by a partnership agreement which may be made in writing, verbally or by implication.

Each business partner owns an agreed part of the business assets and receives an agreed part of the profit made by the business. A business partnership is subject to unlimited liability. This means that all business partners are personally responsible for all the business debts. If a business partner does not meet their share of a debt, the other business partners are then responsible for the repayment of that debt.

The business may be run in the name of the business partners or under a registered business name.

You or your partner are part of a business partnership if either of you are involved with another person in the running of a business.

Sole trader or self employed

A sole trader is a person who is self-employed. If you operate your business as a sole trader, you trade on your own and control and manage the business. You choose when, where, how and who you work for. A sole trader:

  • only needs to lodge a personal tax return
  • owns all the assets of the business
  • is entitled to all the profits of the business, and
  • is responsible for all the debts of the business

A sole trader is the simplest and most inexpensive form of business structure to set up. You can trade under your own name. If you want to trade under another name, your business name must be registered.

Assessable assets and income of a business

We need to know the assessable income and assets that relate to your or your partner’s business arrangement. This includes if you or your partner are in a business partnership, are a sole trader or self-employed. Any income and assets that belong to you and your partner, both personal and business, may affect your and your partner’s income support payment.

Assessable assets

We will assess your and your partner’s portion of net assets of your business arrangement.

We use the current market value of the business assets, less the business liabilities listed on the business’ financial statements, which are allowable deductions under Social Security legislation. Not all liabilities may be allowed, such as those secured against exempt assets, for example the principal home of a member in a partnership. Liabilities secured against exempt assets will not reduce the value of the business assets.

A sole trader’s assets can include both business and personal assets.

Assessable income

We will assess your gross income or your share of a business partnership, less the allowable deductions. Not all deductions allowed under taxation law are allowed under social security legislation and policy.

We allow the following deductions:

  • those expenses necessarily incurred in the production of business income
  • the depreciation of business assets, and
  • superannuation contributions for employees of the business

Some of the general deductions we do not allow include:

  • prior year losses
  • offsetting losses from unrelated businesses
  • superannuation contributions for a sole trader or partnership members, and
  • certain capital expenses

Your payment entitlement

In order to work out if you can get a payment, we need to work out your assessable income and assets.

You will need to complete the Business Details form if you are involved in a business.

If you or your partner are in a business partnership you will need to supply the Business Details form and:

  • a copy of your partnership agreement
  • your most recent partnership tax return
  • your most recent profit and loss statement, or income statement
  • your most recent depreciation schedule, and
  • your most recent Livestock Trading Account, if your business is a primary production business

If you or your partner is a sole trader, you will need to supply the Business Details form and:

  • the sole trader's personal tax return
  • the most recent profit and loss statement, or income statement
  • the most recent depreciation schedule, and
  • the most recent Livestock Trading Account if the business is a primary production business

Depreciation can only be claimed as an expense for the time when the asset is being used for business purposes and owned by you. Your depreciation schedule shows the percentage of time during which the asset was used as a business asset and how long you owned it.

Page last updated: 25 January 2016