Lodgement requirements for partnership acquisitions for professional partnerships

What this direction is about

1. This practice direction has guidelines on the lodgement requirements for partnership acquisitions that are dutiable transactions under the Duties Act 2001 (Duties Act). These guidelines are not a safe harbour but are to help professional partnerships comply with lodgement obligations. Submissions will need to be made to the Commissioner if alternative evidence of value to that outlined below is proposed.
2. The guidelines cover:
   1. the evidence of value of dutiable property, including minimum evidentiary requirements
   2. valuations, including valuation currency and use of market critiques
   3. service trusts
   4. lodgement documentation.
3. The Commissioner may need more information if appropriate or necessary to enable a correct assessment to be made. Ultimately, each matter will be assessed on a case-by-case basis.

Direction and explanation

Evidence of value of dutiable property

4. Dutiable property held by professional partnerships generally includes Queensland business assets—in particular, goodwill, debts of a business where the debtors reside in Queensland (‘Queensland debtors’), supply rights of a business (‘work in progress’ and unbilled recoverables) and personal property of the business (such as property, plant and equipment in Queensland).
5. Professional partnerships may also hold other dutiable property either directly or indirectly through a partnership interest or trust interest or series of partnership or trust interests. This may include (but is not limited to) land or an interest in land in Queensland, existing rights or chattels in Queensland.
6. When making lodgements, all professional partnerships (regardless of size) need to provide evidence of the unencumbered value of all dutiable property held by the partnership.
7. The evidence of value of Queensland business assets for partnership acquisitions will depend on whether or not the partnership is a small partnership.

Partnership size

8. Some of the factors the Commissioner will consider when determining whether a partnership would be considered a small partnership are if the partnership:
   1. has a small number (generally less than 5) of partners
   2. has a small market presence that is likely to be suburban or regionally based
   3. is not part of a group with a national presence
   4. has annual revenue of less than $10 million.
9. These factors are a guide only. A partnership may not be considered a small partnership if it has, for example, a small number of partners but an annual revenue of more than $10 million; or is based in a region but is part of a group with a national presence.
10. A small partnership will be required to provide evidence of value of dutiable property in the form of financial statements for the previous 3 years with the partnership acquisition lodgements, together with notes to the financials.
11. Any partnership that is not considered to be a small partnership will be required to provide a valuation with the partnership acquisition lodgements, in addition to its financial statements for the previous 3 years and the notes to the financials.
12. Nothing in this practice direction limits the Commissioner’s statutory power to request a valuation from any partnership, including a small partnership. Some of the circumstances where this may arise include:
    1. there has been a material change in the partnership (growth in the partnership, merger or separation, change in work undertaken, change in underlying operations of the partnership)
    2. there has been a change in market conditions
    3. the partnership interests are changing frequently
    4. there has been non-compliance with lodgement requirements
    5. the evidence of value provided does not satisfy the Commissioner.
13. For more details on the currency of financial statements, see ‘Minimum evidentiary requirements’.

Minimum evidentiary requirements

14. The minimum evidentiary requirements for professional partnerships when submitting lodgements differ depending on whether:
    1. there has been no material change to the partnership’s financial situation over the last 12 months (scenario A—see Attachment 1)
    2. a material change to the partnership’s financial situation has occurred over the last 12 months (scenario B)
    3. there has been a structural change—for example, a merger of partnerships, or a partnership splitting into smaller partnerships (scenario C).
15. Attachment 1 shows the minimum evidentiary requirements in each of these scenarios. It lists the types of business assets commonly held by professional partnerships that are dutiable under the Duties Act, along with a non-exhaustive list of the minimum evidence the Commissioner may rely on for determining the dutiable value of the property at the liability date. Where appropriate, the same evidence should also be provided for any related services entity.
16. Partnerships seeking to rely on evidence of value at a different date, or alternate evidence of value to that listed, will need to satisfy the Commissioner that the evidence is appropriate in the circumstances.
17. In circumstances where there has been a material change to the financial situation of the partnership, the partnership will need to provide suitable evidence of value of dutiable property and satisfy the Commissioner that the evidence is appropriate in the circumstances.
18. Partnerships need to provide evidence that helps the Commissioner determine that the property relates to the Queensland business, including that certain business assets have been appropriately apportioned to Queensland under sections 26 and 27 of the Duties Act. For the Commissioner to apply a different apportionment methodology as provided for in sections 26 to 28 of the Duties Act, partnerships will need to make a submission that will be considered on a case-by-case basis.
19. See Attachment 2 for examples of minimum evidentiary requirements in particular scenarios.

Valuations

20. For a partnership that is required to provide a valuation with their partnership acquisition lodgements, the valuation will need to:
    1. be prepared by a registered valuer or someone with a relevant business valuation qualification or expertise in valuing businesses (independent of the partnership) and be for transfer duty purposes
    2. include the unencumbered value of all business assets of the partnership located (or taken to be located for transfer duty purposes) in Queensland including the Queensland dutiable proportion of goodwill as at the date of the dutiable transaction.
21. The valuation must also include:
    1. a detailed description of the property being valued
    2. the general valuation principles and methodology and the basis of the valuation
    3. detailed valuation analysis, including the reasons for the selected approach as the primary valuation methodology and secondary methodology used for crosscheck purposes
    4. justification for parameters chosen in the valuation
    5. either a copy of the letter of engagement or terms of engagement including the instructions given to the valuer
    6. information and key assumptions relied on and rationale for those assumptions being made
    7. a description of any material risks to the valuation.

Valuation review

22. The following are examples of what the Commissioner will focus on when reviewing a valuation.
    1. Methodology—the methodology that has been used to value the partnership and whether it has considered the key value drivers of the partnership
    2. Partnership earnings—how they have been determined for valuation purposes; for example:
       1. what factors were considered in determining earnings and how they have been considered
       2. whether the valuation has looked at historical and forecast operating results
       3. what normalisation adjustments (if any) have been made and whether they are fair and include favourable and unfavourable outcomes
    3. Notional salaries used for equity partners—how they have been determined and justified; for example:
       1. whether remuneration levels of other salary only employees (senior employees or non-equity partners) at the partnership firm and of other typical alternate or competing career paths for partners where the skill set is transferable were considered
       2. whether there has been any calibration to market for comparable skills and expertise through use of external benchmarks, such as salary surveys published by recruitment firms
       3. whether there have been any crosschecks on the reasonableness of profit margins implied by the notional salaries. Note: if a firm targets an EBIT (earnings before interest and tax) margin as a primary method for estimating non-exertion earnings, the Commissioner will be looking for a crosscheck of the implied notional salaries against other data such as salary surveys and amounts paid to non-equity partners
    4. Capitalisation rate (or earnings multiple)—how it was determined and justified; for example, whether selection of the capitalisation rate (or earnings multiple) considered:
       1. factors affecting the partnership
       2. comparable earnings multiple data of other businesses
       3. different asset intensity between firms due to different depreciation and amortisation charges
    5. Adjustments—whether there have been any adjustments made to the valuation and the rationale for those adjustments
    6. Non-core (surplus assets)—whether any have been identified and how they have been treated for the purposes of valuation.

Aspects of valuations generally not accepted

23. The following is a guide on aspects of a valuation that will generally not be accepted. The Commissioner has a broad discretion and there may be other aspects of a valuation that may not be accepted as they arise.
    1. Valuations that make statements without appropriate justification. Supporting material or justification is required to provide confidence that statements made are correct.
    2. Valuations that use ratios for comparative purposes that are distorted by capital structure of the comparable companies. Partnerships generally have low capital requirements and hence low interest costs. It is considered it may be more appropriate to compare partnership earnings with EBIT and use corresponding comparison valuation ratios because this excludes the variation associated with interest costs under a listed company capital structure.
    3. For determination of notional salaries:
       1. Valuations that assign fixed returns to partnership equity and attribute remaining earnings to notional salaries—because it is contrary to proper business structure. Equity partners are not inducted for their financial capital contribution, but for their ability to provide human capital that will enhance the overall business. Partnership revenue comes from the partners’ capabilities, not from a return on their invested money.
       2. Applying a fixed percentage increase to a set notional salary per partner—because it does not have any calibration to market remuneration for comparable skills and expertise; does not recognise the actual skills and expertise of the partners, the actual changes in market salaries for people with their attributes, or provide any reasonableness crosscheck of the resulting non-exertion earnings.
       3. Setting notional salaries for equity partners at a level that provides a targeted EBIT margin with no external benchmarking—because this would imply notional salaries that fluctuate inversely to profitability to maintain the target profit margin.
    4. Applying inappropriate discounts to the valuation, including, for example:
       1. excluding the value of the workforce to determine an adjusted goodwill because the workforce is not a separate asset that can be deducted
       2. applying a minority interest discount because the whole partnership is to be valued for transfer duty purposes, not individual partnership interests
       3. applying a discount for lack of marketability because the whole partnership is to be valued for transfer duty purposes. Because there is no active market in whole businesses, they are all equally illiquid and no illiquidity discount should be applied.
    5. Applying a capitalisation rate or earnings multiple that is fixed—because as market circumstances change, comparability to market will provide more support for the capitalisation rate/earnings multiple used in the valuation.
    6. Negative goodwill, in the legal sense, is expected to be very rare and only in exceptional cases. Negative goodwill would imply that other attributes of the firm—such as its reputation, culture and relationships—are detracting from the efforts of the people, rather than adding to them.

Valuation currency and market critiques

24. The following table is a guide on the currency of valuations that can be provided by partnerships that are not small. It also outlines the periods in which firms can submit a market critique, subject to the market critique providing sufficient justification. The purpose of a market critique is to provide analysis that justifies relying on a prior valuation for the partnership (including goodwill). Beyond those periods outlined in the table, the accumulation of changes in the firm and the market generally are more likely to be substantial. Therefore, a market critique is not sufficient and a new valuation will be required.

Partnership type	Currency of valuation
Type 1 Top-tier, large, generally city-based firm that may be multi-jurisdictional or even a global partnership Mid-tier or medium sized firm that is generally city based Firm typically with more than $30 million in annual revenue	Valuation to be no more than 2 years old from date of valuation to date of partnership acquisitions. For valuations older than 12 months, a market critique to be submitted in support of the partnership’s view that the previous valuation is still appropriate.
Type 2 For partnerships that are not small partnerships and which do not fall within Type 1	Valuation to be no more than 3 years old from date of valuation to date of partnership acquisitions. For valuations older than 2 years, a market critique to be submitted in support of the partnership’s view that the previous valuation is still appropriate.

25. The scope of the market critique and justification provided are expected to vary with the extent of the firm’s reliance on the older valuation. Some aspects that will be focused on include:
    1. justification as to why and how the previous valuation is being used as a basis for estimating current value (or goodwill)
    2. whether the market critique looks at the nature of the business and whether there has been any change in the operations of the partnership which impacts on value
    3. whether there has been analysis of the appropriateness of the earnings multiple used in the previous partnership valuation and whether there has been any benchmarking undertaken (i.e. consideration of recent transaction multiples for comparable businesses and earnings multiples for listed comparable companies) to determine if there has been any change in the multiple
    4. whether there has been any change in total non-exertion earnings for the partnership and an analysis around the partner notional salaries for the current year.
26. Nothing in this practice direction limits the Commissioner’s statutory power to request a valuation or rely on other evidence of value the Commissioner considers ppropriate. This can include where:
    1. there has been a material change in the partnership
    2. there has been a change in market conditions
    3. the partnership interests are changing frequently
    4. there has been non-compliance with lodgement requirements
    5. the evidence of value provided by the partnership (which may include a market critique) does not satisfy the Commissioner.

Service trusts

27. Some firms can have a service trust or trusts that provide goods and services to the partnership for the purposes of running the business. Partnership acquisitions can sometimes be accompanied by trust acquisitions.
28. Where a trust acquisition has occurred, the partnership and the trust are to be valued separately. Separate lodgements are required for the partnership acquisitions and for the trust acquisitions. Trust acquisitions will be assessed under the trust provisions of the Duties Act. Where the dutiable transactions together form, evidence, give effect to or arise from what is substantially one arrangement, the aggregation rules under section 30 of the Duties Act will apply and the transactions will be treated as a single dutiable transaction.
29. For some firms that have service trusts, there are no direct trust acquisitions occurring when there are partnership acquisitions, or interests in the trust may be discretionary. In this circumstance, the valuer will need to explain how the service trust has been treated when undertaking a valuation of the partnership and why. For instance, if the assets and liabilities of the trust and partnership have been consolidated for the purposes of calculating the partnership’s goodwill, an explanation from the valuer as to why consolidation is appropriate is needed. Information should include matters such as the relationship between the partnership and the service entity, the nature of the trust business, and an explanation as to how the assets and liabilities have been treated for the purposes of determining goodwill.

Lodgement documentation

30. Certain documentation needs to be provided with professional partnership acquisition lodgements, in addition to that which has previously been outlined. Where there are separate trust acquisitions occurring, refer to the trust acquisition lodgement requirements on the QRO website at qro.qld.gov.au.
31. For dutiable transactions on formation of a professional partnership, the following documents must be provided¹:
    1. the partnership agreement
    2. the services agreement for services provided to the partnership by any service entity
    3. a dutiable transaction statement (Form D2.2)
    4. an identity details annexure for each non-Australian transferor and transferee, when transferring real property (e.g. houses, apartments, business premises and vacant land)
    5. a valuation for any dutiable property that is acquired by a partner
    6. a covering letter
       1. advising if any of the partners are acquiring dutiable property previously owned by 1 of the other partners (for example, land or plant and equipment)
       2. outlining the documents you have lodged, your name and return address.
32. For other dutiable transactions involving a professional partnership, the following documents must be provided²:
    1. the original partnership agreement
    2. details of the partners, their respective shares and arrangements for profit sharing and distribution of assets when winding up (if a partnership agreement has not been executed)
    3. a dutiable transaction statement (Form D2.2)
    4. an identity details annexure for each non-Australian transferor and transferee, when transferring real property (e.g. houses, apartments, business premises and vacant land)
    5. evidence of value of dutiable property of the partnership, addressing minimum evidentiary requirements as outlined under ‘Minimum evidentiary requirements’
    6. depending on partnership size, a valuation of the partnership (including goodwill) supported by financial statements for the previous 3 years
    7. the services agreement for services provided to the partnership by any service entity in circumstances where the assets and liabilities of the trust and partnership have been consolidated for valuation purposes
    8. details of any liabilities being taken over
    9. a transfer duty statement (Form D2.3) or instrument that effects or evidences the transaction (as appropriate)
    10. a covering letter outlining the documents you have lodged, your name and return address.
33. Where a lodgement is made on an annual basis in line with Public Ruling DA019.2—Extension of time to lodge partnership acquisitions and trust acquisitions for certain professional partnerships, the Commissioner may accept one dutiable transaction statement or transfer duty statement (as appropriate) provided that it contains all relevant information for each transaction that occurred over the 12-month period.

Date of effect

34. This practice direction takes effect from 8 April 2024.

 

Simon McKee
Commissioner of State Revenue
Date of issue: 3 April 2024

References

Practice direction	Issued	Dates of effect
		From	To
DA000.2.1	3 April 2024	8 April 2024	Current

Attachment 1

Minimum evidentiary requirements

	Scenario A No material change to financial situation of the partnership	Scenario B Material change to financial situation of the partnership	Scenario C Structural change
Requirements	Evidence of value and currency	Evidence of value and currency	Evidence of value and currency
Financial statements	Previous 3 years of audited financial statements of the partnership (including any related service entity). The most recent audited financial statements of the partnership (including any related service entity) to be not more than 12 months old. Where a partnership does not prepare audited statements, it can provide the previous 3 years of finalised unaudited financial statements of the partnership (including any related service entity), with the most recent finalised unaudited statements provided to be not more than 12 months old. The financial statements will need to be endorsed by the partnership.	Previous 3 years of audited financial statements of the partnership (including any related service entity). The most recent audited financial statements of the partnership (including any related service entity) to be not more than 12 months old. Where a partnership does not prepare audited statements, it can provide the previous 3 years of finalised unaudited financial statements of the partnership (including any related service entity), with the most recent finalised unaudited statements provided to be not more than 12 months old. The financial statements will need to be endorsed by the partnership.	Most recent audited financial statements of the partnerships (including any related service entity) before the structural change. Most recent audited financial statements of the ‘relevant partnership’ (including any related service entity) after the structural change. Where a partnership does not prepare audited statements, it can provide the most recent finalised unaudited financial statements of the partnership (including any related service entity). The financial statements will need to be endorsed by the partnerships.
Declaration	Partnership will need to provide a declaration that there has been no material change in the financial situation of the partnership over the last 12 months.	Declaration not required.	Declaration not required.
Valuation	Will depend on partnership size (see ‘Partnership size’). For currency of valuation see ‘Aspects of valuations generally not accepted’.	Will depend on partnership size (see ‘Partnership size’). If the partnership is required to provide a valuation and there has been a material change to its financial situation over the last 12 months, the partnership is likely to need a new valuation or a market critique in the circumstances. See ‘Valuation currency and market critiques’.	Will depend on partnership size (see ‘Partnership size’). If a valuation is required, the valuation must be current for the ‘relevant partnership’ given the structural change.
Dutiable property	Evidence of value and currency	Evidence of value and currency	Evidence of value and currency
Debt of a business	Ledger or balance sheet as at 30 June in the financial year in which the acquisitions take place. Ledgers may be redacted for privacy or confidentiality but should have sufficient information to identify Queensland debtors.	Ledger or balance sheet as at 30 June in the financial year in which the acquisitions take place. Documentation advising what material changes have taken place and when. Ledgers may be redacted for privacy or confidentiality but should have sufficient information to identify Queensland debtors.	Ledger or balance sheet of the ‘relevant partnership’ as at the liability date. Ledgers may be redacted for privacy or confidentiality but should have sufficient information to identify Queensland debtors.
Supply right (e.g. work in progress)	Ledger or balance sheet as at 30 June in the financial year in which the acquisitions take place. Ledgers may be redacted for privacy or confidentiality but should have sufficient information to support submissions about nexus or apportionment to Queensland.	Ledger or balance sheet as at 30 June in the financial year in which the acquisitions take place. Documentation advising what material changes have taken place and when. Ledgers may be redacted for privacy or confidentiality but should have sufficient information to support submissions about nexus or apportionment to Queensland.	Ledger or balance sheet of the ‘relevant partnership’ as at the liability date. Ledgers may be redacted for privacy or confidentiality but should have sufficient information to support submissions about nexus or apportionment to Queensland.
Intellectual property	Balance sheet as at 30 June in the financial year in which the acquisitions take place or latest available balance sheet. Information as to how the book value has been determined.	Balance sheet as at 30 June in the financial year in which the acquisitions take place or latest available balance sheet. Information as to how the book value has been determined, together with documentation advising what material changes have taken place and when.	Current balance sheet as at the liability date. Information as to how the book value has been determined.
Personal property (e.g. PPE)	Fixed asset register as at 30 June in the financial year in which the acquisitions take place. Information as to how the book value has been determined. Register should identify property located in Queensland.	Fixed asset register as at 30 June in the financial year in which the acquisitions take place Information as to how the book value has been determined, together with documentation advising what material changes have taken place and when. Registers should identify property located in Queensland.	Fixed asset register as at the liability date. Information as to how the book value has been determined. Register should identify property located in Queensland.
Goodwill	If the partnership is required to provide a valuation, the valuation will need to address goodwill in line with requirements outlined under ‘Valuation review’.	If the partnership is required to provide a valuation, the valuation will need to address goodwill in line with requirements outlined under ‘Valuation review’. If there has been a material change to the financial situation of the partnership over the last 12 months, the partnership is likely to need a new valuation or a market critique depending on the nature of the material change in the circumstances.	If the partnership is required to provide a valuation, the valuation will need to address goodwill in line with requirements outlined under ‘Valuation review’. Valuation provided must be current for the ‘relevant partnership’ given the structural change.

Attachment 2

Examples of minimum evidentiary requirements

The following are examples of the minimum evidentiary requirements to be lodged with QRO in particular scenarios. These are for guidance purposes and do not cover all potential scenarios or lodgement frequency.

1A Partnership does not prepare audited financial statements, and there has been no material change to financial situation of the partnership

There have been partnership acquisitions during the 2022–23 financial year in Partnership One. Over the last 12 months, there has been no material change to the financial situation of the partnership. The partnership does not prepare audited financial statements.

Minimum lodgement requirements

When the partnership acquisition lodgements are submitted to QRO, the finalised unaudited financial statements for the previous 3 years for the partnership and any related service entity will need to be endorsed and provided by Partnership One. The most recent financial statements can be no more than 12 months old.

If the 2022–23 financial statements:

• have already been finalised before submission, the partnership would need to lodge the 2020–21, 2021–22 and the 2022–23 financial statements endorsed by the partnership.
• have not been finalised before submission, the partnership would need to lodge the 2019–20, 2020–21 and 2021–22 financial statements endorsed by the partnership, along with a declaration that there has been no material change in the financial situation of the partnership over the last 12 months.
• have not been finalised, the partnership also will need to provide a copy of its ledger as at 30 June 2023 and its fixed asset register as at 30 June 2023.

The partnership may need to provide a valuation depending on its size (see ‘Partnership size’) and whether an existing valuation is still current (see ‘Valuation currency and market critiques’).

1B Partnership prepares audited financial statements, and there has been no material change to financial situation of the partnership

There have been partnership acquisitions during the 2022–23 financial year in Partnership Two. Over the last 12 months, there has been no material change to the financial situation of the partnership. The partnership prepares audited financial statements.

Minimum lodgement requirements

When the partnership acquisition lodgements are submitted to QRO, the audited financial statements for the previous 3 years will need to be provided for Partnership Two and any related service entity. The most recent audited financial statements can be no more than 12 months old.

If the 2022–23 audited financial statements:

• have already been finalised before submission, the partnership would need to lodge the 2020–21, 2021–22 and the 2022–23 audited financial statements.
• have not been finalised before submission, the partnership would need to lodge the 2019–20, 2020–21 and 2021–22 audited financial statements, along with a declaration that there has been no material change in the financial situation of the partnership over the last 12 months.
• have not been finalised, the partnership will also need to provide a copy of its ledger and its fixed asset register as at 30 June 2023.

The partnership may need to provide a valuation depending on its size (see ‘Partnership size’) and whether an existing valuation is still current (see ‘Valuation currency and market critiques’).

2A Partnership does not prepare audited financial statements, and there has been a material change to financial situation of the partnership

There have been partnership acquisitions during the 2022–23 financial year in Partnership Three. Over the last 12 months, there has been a material change to the financial situation of the partnership. It does not prepare audited financial statements.

Minimum lodgement requirements

When the partnership acquisition lodgements are submitted to QRO, the finalised unaudited financial statements for the previous 3 years for the partnership and any related service entity will need to be endorsed and provided by Partnership Three. The most recent financial statements can be no more than 12 months old.

If the 2022–23 financial statements:

• have already been finalised before submission, the partnership would need to lodge the 2020–21, 2021–22 and the 2022–23 financial statements endorsed by the partnership.
• have not been finalised before submission, the partnership would need to lodge the 2019–20, 2020–21 and 2021–22 financial statements endorsed by the partnership, a copy of its ledger and its fixed asset register as at 30 June 2023, along with documentation advising what material changes to the value of dutiable property have taken place and when.

The partnership may need to provide a valuation depending on its size (see ‘Partnership size’) and whether an existing valuation is still current (see ‘Valuation currency and market critiques’).

2B Partnership prepares audited financial statements, and there has been a material change to financial situation of the partnership

There have been partnership acquisitions during the 2022–23 financial year in Partnership Four. Over the last 12 months, there has been a material change to the financial situation of the partnership. It prepares audited financial statements.

Minimum lodgement requirements

When the partnership acquisition lodgements are submitted to QRO, the audited financial statements for the previous 3 years for the partnership and any related service entity will need to be provided for Partnership Four. The most recent financial statements can be no more than 12 months old.

If the 2022–23 audited financial statements:

• have already been finalised before submission, the partnership would need to lodge the 2020–21, 2021–22 and the 2022–23 audited financial statements.
• have not been finalised before submission, the partnership would need to lodge the 2019–20, 2020–21 and 2021–22 audited financial statements endorsed by the partnership, a copy of its ledger and its fixed asset register as at 30 June 2023, along with documentation advising what material changes to the value of dutiable property have taken place and when.

The partnership may need to provide a valuation depending on its size (see ‘Partnership size’) and whether an existing valuation is still current (see ‘Valuation currency and market critiques’).

3A Partnership does not prepare audited financial statements, and there has been a structural change to the partnership because it has merged with another partnership

Partnership Five and Partnership Six have merged and there have been partnership acquisitions. The partnerships do not prepare audited financial statements.

Minimum lodgement requirements

When the partnership acquisition lodgements are submitted to QRO, the most recent finalised unaudited financial statements of Partnership Five (and any related service entity) and the most recent unaudited financial statements of Partnership Six (and any related service entity) before the structural change will need to be provided, along with unaudited financial statements for the newly merged partnership and any related service entity.

The newly merged partnership will need to provide a copy of the ledger or current balance sheet and its fixed asset register as at the liability date.

The newly merged partnership may need to provide a valuation depending on its size (see ‘Partnership size’).

3B Partnership prepares audited financial statements, and there has been a structural change to the partnership because it has merged with another partnership

Partnership Five and Partnership Six have merged and there have been partnership acquisitions. Both partnerships prepare audited financial statements.

Minimum lodgement requirements

When the partnership acquisition lodgements are submitted to QRO, the most recent audited financial statements of Partnership Five (and any related service entity) and the most recent audited financial statements of Partnership Six (and any related service entity) before the structural change will need to be provided, along with audited financial statements for the newly merged partnership and any related service entity.

The newly merged partnership will need to provide a copy of the ledger or current balance sheet and its fixed asset register as at the liability date.

It may need to provide a valuation depending on its size (see ‘Partnership size’).

Note: If only Partnership Five prepares audited financial statements and Partnership Six does not, then the most recent audited financial statements for Partnership Five before the structural change will need to be provided by Partnership Five and the most recent unaudited financial statements for Partnership Six before the structural change will need to be endorsed and provided by Partnership Six.

Footnotes

1. The forms in subparagraphs (c) and (d) can be downloaded from the QRO website at qro.qld.gov.au.
2. The forms in subparagraphs (c), (d) and (i) can be downloaded from the QRO website at qro.qld.gov.au.