The rules of commencement for a partnership business are the tax regulations that apply when a partnership business is newly established. These rules determine how the partnership’s income is taxed in the first few years of its existence. The rules are as follows:

1. Actual Basis in the First Year:
   In the first year of assessment, a new partnership business is assessed to tax on the actual profits earned from the date of commencement to the end of the first accounting year. The basis period for the first year is the period from the commencement date to the end of the accounting year.
2. First 12 Months in the Second Year:
   In the second year of assessment, the business is taxed on the first 12 months of profits from the date of commencement. This means that if the accounting year does not cover 12 full months, adjustments are made to ensure that a full 12 months’ worth of profits are assessed.
3. Preceding Year Basis in the Third Year:
   From the third year of assessment onwards, the partnership is assessed on the preceding year basis. This means that the profits assessed to tax for each year are those earned in the accounting period ending in the previous year.
4. Overlap Profits:
   In cases where there is an overlap of profits (i.e., the same profits are taxed twice during the commencement years), the overlap profits are carried forward and can be relieved in the final year of assessment when the partnership ceases business.