Income Tax Treatment of Limited Liability Partnerships (LLPs) - IRAS

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Annex 5 - Example showing tax treatment of partners of an LLP where Section 10E is applicable………..………………….... 25
Income Tax Treatment of Limited Liability Partnership (LLP) 1 Aim 1.1 This e-Tax guide explains the tax treatments of an LLP. It consolidates the two previous e-Tax guides 1 issued on income tax treatment of LLPs. 1.2 It will be relevant to you if you are involved with any LLP business. 2 At a glance 2.1 An LLP is tax transparent which means its income is not taxed at LLP level. Instead, the income will be taxed in the hands of each partner of the LLP as his 2 share of income from the LLP at his relevant income tax rate. 2.2 In each year of assessment (“YA”), each partner’s share of the following may be deducted against his income from other sources: (i) Capital Allowances (“CA”) and Industrial Building Allowances (“IBA”) in excess of his LLP income; (ii) Trade losses from the LLP; (iii) Donations 2.3 The amount of a partner’s share of an LLP’s CA, IBA and trade losses that can be allowed against his income from other sources is subject to relevant deduction restriction (see paragraph 6.1). 2.4 A partner’s share of unabsorbed current year CA, IBA, trade losses and donations can be: (i) carried forward to the next year of assessment (“YA”) for deduction against future income of the partner from the same LLP; (ii) transferred to his spouse or related company/companies for the same YA; or (iii) carried back for deduction from the assessable income of his or (if he is an individual), his spouse in the YA immediately preceding that YA (unabsorbed current year donations cannot be carried back). 2.5 Other aspects of the tax treatment of an LLP, including transfer of business or properties and certain administrative procedures are also covered. 1 The e-Tax guide is a consolidation of two previous e-Tax guides on: a) “Income Tax Treatment of Limited Liability Partnership (LLPs)” published on 15 Jul 2004 b) “Income Tax Treatment of Limited Liability Partnership (LLPs) (Supplementary Circular)” published on 10 Jun 2005 2 In this context, the term “his” is not confined to the male individual, but refers to a legal person who could include a female individual, a company, another LLP, and the trustee of a trust. 1
Page 1 and 2: IRAS e-Tax Guide Income Tax Treatme
Page 3: Table of Contents Page 1. Aim …
Page 7 and 8: (“ITA”)] for a YA that exceed t
Page 9 and 10: (ii) your total relevant deduction
Page 11 and 12: 8.1 Your contributed capital will b
Page 13 and 14: of the YA immediately preceding the
Page 15 and 16: 12.1 For income tax purposes, a pro
Page 17 and 18: election is made, the CIT will deem
Page 19 and 20: 14.3 The precedent partner of the L
Page 21 and 22: Order of deduction for CA, IBA, Tra
Page 23 and 24: Example 1- Tax computations for Mr
Page 25 and 26: ^^The total LLP trade loss c/f of $
Page 27 and 28: Treatment of CA in respect of a pro
Page 29 and 30: Company -Accounting year end: 31 De
Page 31: ANNEX 5 (Continued) YA 2011 Tax Com

Income Tax Treatment of Limited Liability Partnerships (LLPs) - IRAS

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