Advantages 

• Generaly less costly to establish than a company or a trust
• Generally less expensive than a trust or company to run
• Taxpayers understands structure
• Can provide some flexibility in the partnership agreement
• Income splitting between partners exist
• Partners can obtain 50% CGT discount
• Small business CGT concessions easily obtained
• Partnership losses “distributed” to partners can be offset against other income
• Flexibility for CGT in that each partner can independently choose the concessions they want. Failure by one partner to satisfy the conditions will not affect the other partner
• Flexibility and asset protection can be obtained by using trusts as partners
• Independent parties can be admitted as partners
• Trading stock and depreciable asset rollover relief available on the admission of partners
• No Division 7A type problems with debit loan accounts

Disadvantages

• The partners are jointly and severally liable
• Generally no asset protection
• New personal services income laws may attribute all income to one partner for tax purposes
• Income cannot be accumulated and must be assessed at personal tax rates
• Complex PAYG installment calculations
• Partners cannot claim input tax credits when paying partnership expenses. Complicated reimbursement procedure must be followed so that the partnership can claim the input tax credit under Division 111 GST Act
• Partners cannot be employed by the partnership for salary packaging purposes
• Partners cannot claim a deduction for interest on borrowings to pay income tax, whereas, individuals and other business entities can. Refer IT 2582 and TD 2000/24
• Deductions for superannuation contributions are restricted in the same manner as they are for individuals
• The non-commercial loss rules apply
• The substantiation rules apply to car and travel expenses