TAXA2000 introduction to Australian taxation law

Fiona and Bruce are equal partners in a printing business which used the elections available to SBE taxpayers and used the cash basis. The business is operated from a building which they own.  The building is too large for them and they sublet some of it.  During the current year they sublet it to a new tenant who paid them a lease premium of $25,000 on 1 July CY.

 

The income and expenditure of the partnership are as follows:

 

Income    $

Cash received.  Most jobs were paid for at the time of collection although a number of clients paid on account.  At 30 June CY $35,000 was outstanding.      530,000

Lease payments from tenants    73,000

Prepaid lease payments received on 30 June CY.  One of the tenants decided to prepay a year’s lease payments.      16,000

Dividends from a public company.  It had franking credits of $4,000 attached    9,334

Interest of drawings.  Fiona had paid $2,120 and Bruce had paid $5,000    7,120

 

 

Expenses

Motor vehicle expenses    22,000

Entertainment of clients.  Records showed that 30% of entertainment related to staff and the remaining 70% to clients    3,000

New printer for use in the accounts department.  It had an effective life of 4 years.  It had been acquired on 17 March CY    899

Operating expenses    177,991

Superannuation – Bruce    25,000

Superannuation – Fiona    25,000

Telephone expenses paid for Sales Manager’s mobile phone.  20% of calls were private    2,200

Wages – Bruce    80,000

Wages – Fiona    80,000

 

 

Notes:

 

The closing balance of the general pool at 30 June PY was $86,000.

 

The partnership was repaying a 2 year loan which it had taken out on 1 June PY.  The borrowing expenses in relation to this loan totalled $1,400.

 

The partnership had made a loss of $6,000 in the previous year.

 

Both partners had been members of the Navy Reserve for the current year and the previous 5 years and had each received $8,000 in each of those years.  

 

Required:

 

Calculate the net income of the partnership for the current year.    

 

Calculate Bruce’s and Fiona’s taxable incomes and net tax payable.