An SMSF can invest in a partnership as a partner and has its share of the profit or loss of the partnership. This article aims to demonstrate how this can be accounted for in Simple Fund 360.
Please note, BGL does not provide tax advice, for compliance purposes, check ATO Website.
1. How to account for an investment in a partnership?
73200 Account is set up as a default control account for interests in partnerships.
When an SMSF invests in a partnership, follow the steps below to record the investment.
|Navigate to Accounting from the main toolbar|
|Select Transaction List|
|Under New transactions, select Bank Statement|
|Select Investment under Add New Account to create a sub-account under 73200 Account|
Select Interest in Partnerships as Investment Type to finish creating a new investment Account. Click on Save once done.
Also check how to add an investment account for further details.
Example 1. An SMSF invested $100,000 in a partnership at the market value.
Dr. 73200 Interests in partnerships $100,000
Cr. 60400 Bank $100,000
Input 1 for Unit if the investment is treated as a whole or enter share of units in the partnership where applicable.
Fill in the contract and settlement dates in More Details panel. Select Post to finalise the transaction.
2. How to account for disposals of partnership interests?
The treatment for disposals of partnership interests would be the opposite of processing an investment above.
Example 2. The SMSF in example 1 sold all its share of partnership interests for $120,000 to an unrelated third party.
Dr. 60400 Bank $120,000
Cr. 73200 Interests in partnerships $100,000
24700 Changes in Market Value $20,000
Enter the number of units disposed of (i.e. one unit in this example). Under More Details panel, make sure the right parcel has been selected.
Also refer to how to process disposals for more details.
3. How to account for profit/loss of an investment in a partnership?
Please refer to the article