In an unincorporated joint venture (JV), there's no separate tax return for the JV itself. Instead, each participant files their own tax return, including their share of expenses and income. They're taxed individually on any profits they make from selling their share of the JV's output. This setup is different from partnerships, where all partners are taxed together.
In a JV, each participant contributes resources like cash, assets, or skills and receives a share of the final product. They own their share of the assets separately, spend their own money, and handle their own income. For tax purposes, they need to decide if their JV earnings are from selling goods, capital gains, or part of a profit scheme.
If a JV participant isn't running a business, any land they sell won't be seen as trading stock. The money from selling the land could be considered a capital gain or part of a profit scheme, and each participant can claim deductions based on their own expenses and situation.
GST Tip: Special rules apply for joint ventures under Division 51 of the GST Act. If certain conditions are met, the JV can be treated as a single entity for GST purposes, known as a GST joint venture (GST JV). The participants nominate one of them or a third party as the GST JV operator, who handles GST accounting and submits activity statements. This simplifies accounting by consolidating transactions under one entity.
For example, in a GST JV between a landowner and a builder, with the builder as the operator, any services provided by the builder to the landowner aren't subject to GST.
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