Two of my clients, a married couple, have jointly held residential investment property. The husband is a higher rate taxpayer and the wife is a basic rate taxpayer and they would like to change the allocation of the property income.

They do not want to change their 50/50 capital interest so have decided to form a general partnership to take advantage of exception C within Income Tax Act 2007 (ITA 2007) section 836 to the assumption they are beneficially entitled to the income in equal shares. Their property portfolio is mortgaged.