Partnerships

A partnership is not regarded as an independent entity for tax purposes. The partnership's taxable income is computed in the same manner as a company's taxable income and is then allocated among the partners, each of which is taxed at the appropriate rate after considering personal deductions, if any, to which each may be entitled.

The partnership income allocated to an individual is split into capital income and earned income. Under the general rule, capital income is computed as 15% of the net assets of the partnership. The remaining income is regarded as earned income. This division of income does not apply to corporate partners.

A loss is allocated to the partnership entity instead of being divided among the partners. A loss may be carried forward for 10 years. Losses may not be carried back. Even in a liquidation situation losses are not divided to the partners to be deducted from their income.