Dissolution of a partnership

Dissolving a partnership is a significant decision that will affect both you and your partner/s.

When can a partnership be dissolved?

Generally a partnership can be dissolved if all partners agree to the decision, or in the following circumstances:

  • It has become illegal (for example, if a partner can no longer legally own a business).
  • A partner gives written notice to the other partners.
  • A court order requires the partnership to end.
  • The life of the partnership has expired.
  • Any partner dies or becomes bankrupt.

What should we consider once we have agreed to dissolve the partnership?

Once you and your partner/s have agreed to dissolve the partnership you need to consider the following questions:

  • Will the business continue to operate once the partnership is dissolved? If so what will be the new business structure?
  • If the business will continue to operate, have the new owner/partners applied for a new ABN and GST registration?
  • Does the partner selling their interest have CGT to pay?
  • If the remaining partner/s will acquire the leaving partner's interest do they need to pay transfer duty
  • Have you closed the partnership books and completed a final tax return and BAS?
  • Have you closed the partnership bank account?
  • Are there any other personal or business related accounts and loans that will be affected by the change in business?
  • Have the insurance policies been cancelled?
  • Have you notified all of the relevant parties? This could include signatories of any ongoing contracts, the bank, customers, the landlord, debtors, creditors, local council, regulators…etc
  • Have you updated, canceled or transfered your business name with Australian Securities and Investments Commission

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