There are advantages and disadvantages for CGT when it comes to partnerships. On the one hand, partners are able to access the 50% CGT discounts upon sale of a CGT asset, because the interest they hold in the partnership assets is held as an individual, rather than as a separate legal entity.

However, because of the way partnerships are structured, each partner is considered to own a proportionate interest in each partnership asset, according to the terms of the partnership agreement. That means that each time a partnership asset is sold, the gain or loss is distributed proportionately among the partners, and must be included in the individual tax return of each partner.

Buying out a partner, or selling your partnership interest, may also have CGT implications. This is because you own your share in the partnership as an asset.

Whether this is a concern for your partnership or not may depend on the number and value of assets held by the partnership group. Where the ongoing business will involve frequent sale of high value assets you should consider whether there will be greater profitability and better taxation minimisation opportunities in a partnership or other business structure.