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Wiley Coyote also operates a mobile telephone dealership, Rocketfone, in partnership with Ralph Sheepdog from premises owned by Wiley. A partnership agreement specifies that all income and losses are to be shared in the ratio of 2:1. Transactions recorded by the partnership during 2015/16 were as follows.
Receipts
$
Income from trading
396,000
Fully franked dividends from Investopedia Ltd
28,000
Proceeds from sale of shares in Lamb Supreme Ltd*
7,000
Payments
Trading stock and overheads
84,000
Salary paid to Wiley
75,000
Salary to Anita Coyote**
45,000
Rent paid to Wiley (includes $30,000 paid on 30 June 2016 for 12 months in advance)
55,000
Interest paid to Ralph on loan
17,000
Interest on capital paid to Wiley
15,000
Interest on capital paid to Ralph
12,000
Superannuation contributed on behalf of Wiley
24,000
* The shares had been purchased in 2012 for $1,000
** The commissioner has issued a private ruling indicating that a salary of $45,000 was reasonable.
Required: With full explanation:
(i) Determine the net income of the Rocketfone:
(ii) Determine the distribution of the net income to the partners: and
(iii) List any other items that you believe should be considered in the preparation of Wiley's tax return.
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