Calculate the tax, Taxation

Assignment Help:

Sue, Scarlett and Sally are in a partnership together providing accounting services.  The partnership uses the cash basis to account for income tax.  Under the partnership agreement, Scarlett is to get a partner's salary of $60,000, and the balance of the net income is to be equally shared between all three partners.  Any franking credits are to be shared according to the partners' relative share of net income.

During the 2009/10 income year, the partnership had invoiced clients $645,000 (incl GST) for services rendered.  However, the partnership had only received $561,000 (incl GST) in cash as at 30 June 2010.  In addition, the three partners had also disposed of a block of land that they had acquired on 12 October 2004 - the sale of the land gave rise to a capital gain of $75,000.  The three partners were going to build office premises, but the location was found to be unsuitable.

Other receipts and expenditure items of the partnership were as follows:

Receipts

Interest income                                            $  12,000

Dividend income (franked to 70%)                    $  60,000

Expenditure

Rental expense                                              $  85,800 (incl GST)

Secretary salary                                            $  50,000

Scarlett's salary                                            $  60,000

Telephone expense                                        $    5,720 (incl GST)

Depreciation on office equipment                      $  10,000

Fringe benefits tax                                         $    4,800

Speeding ticket (penalty)                                $       900

Electricity expense                                         $    2,200 (incl GST)

Drawings - Sue                                              $  25,000

Drawings - Sally                                             $  30,000

Required:

(a) In relation to the above facts, discuss and calculate what the 'net income' of the partnership is for the 30 June 2010 income year.

(b) Calculate Sue, Scarlett and Sally's share of net income of the partnership.

(c) Calculate the tax payable by Scarlett for the 30 June 2010 income year, assuming that she has no private health insurance, no dependants and no other income. You are also advised that Scarlett has net capital losses carried forward of $5,000, plus net capital losses carried forward from collectables of $1,000.  

NOTE      Treatment of dividend income:-

Assessable income

Include the dividend in assessable income under s 44(1) ITAA36.  

Also, include the dividend gross up in assessable income under s 207-35:

Dividend amount x extent franked  x 30/70

Offsets

A franking credit (offset) under s 207-45 equal to the gross up will be available to share amongst the partners (in accordance with their partnership agreement in this case).


Related Discussions:- Calculate the tax

Find out debt to remain constant, Use the information provided in question ...

Use the information provided in question 4 to answer this question. a) What must happen to taxes in year t for the primary deficit to be zero? b) What must happen to taxes in y

Tax file, Carol is a successful physician who owns 100% of her incorporated...

Carol is a successful physician who owns 100% of her incorporated medical practice. She and her husband, Jared, are considering the purchase of a commercial office building located

Change in estimate using the reallocation method, Consider the following sc...

Consider the following scenarios: a) Audit fees received by an auditing firm. b) Final ordinary dividend received. Dividends are declared on 31 December and are payable to sh

Share returns, The tab-delimited text file C223C323_A1_S1_2013_Q1_Q2.txt co...

The tab-delimited text file C223C323_A1_S1_2013_Q1_Q2.txt contains data on the share price of FirstGroup plc (FirstGroup), the public transport company, the share price of Cairn En

Recognized gain or allowable loss, I need help determining the character of...

I need help determining the character of the recognized gain or allowable loss in each of the cases listed below. In each case, these are all of the tax payer realized gains or los

Income tax, Marc and Michelle are married and earned salaries this year of ...

Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds

Calculate taxable income, Caroline is a 55-year-old Australian resident. Sh...

Caroline is a 55-year-old Australian resident. She  is the chief marketing officer based in Sydney for XYZ Limited (XYZ), a public company listed on the Australian Securities Excha

Corporate Taxation, A owns all of the stock of X. The stock’s basis is $2,...

A owns all of the stock of X. The stock’s basis is $2,300. X has a total of current earnings and profits of $1,500 but accumulated earnings and profits of negative $500 (i.e., an

Study case of an exam of GST in new zealand, my level Master of the Paper G...

my level Master of the Paper GST ( law) I have an exam case I have already answered I need to revise the high level tutor ( 5000 words) Can you help me?

Calculate average tax-rate , Thomas Crown expects to earn the following str...

Thomas Crown expects to earn the following stream of annual income for the next four years:- $41,000; $45,000; $38,000 and $50,000. Although he has adopted the ‘Pay Yourself Firs

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd