Identify the main issues and make recommendations to clients

Reference no: EM133640071 , Length: word count:1500

Taxation Law

Assessment - Case Study

Type - Statement of Advice

Your Task
Your task is to analyse client information outlined in the two different case studies below and present the findings in two Statement of Advice (total approximately 1,500 words).

You are required to provide advice on preparation of partnership tax return (N & S partnership)
You are required to calculate the franking account and tax payable by Technical Solutions Pty Ltd.

For each question you are expected to:
identify the facts and issues for each case
apply the relevant legislation and/or case law.

Learning Objective 1: Research information about each question using tax cases and tax legislation.
Learning Objective 2: Identify the main issues and make recommendations to clients for each case.
Learning Objective 3: Preparation of tax return for partners in partnership and calculate tax for a company.

Assessment Instructions

Statement of Advice 1 - Preparation of a tax return for a partnership taxpayer

Your client Nicole and Sam attended your office to have their 2023-year tax return prepared.

Nicole Mania & Sam Baker are equal partners of N&S partnership that is in the business of manufacturing shelters for pets. Both have contributed equal amounts of capital. Nicole is a silent partner while Sam spends most of the time working in the partnership business. To reflect the extra time that Sam spends in the business, they have agreed that Sam should receive an annual salary of $80,000. As per the partnership agreement, Nicole and Sam will share partnership profits equally.

The following information was provided by the business.
Sales $1,000,000
Cost of Sales $550,000
Other expenses (including Sam's salary and decline in value) $210,000

Proceeds from sale of various assets during 2023
Sale of Qantas shares held as an investment (a) $8,900
Sale of Telstra shares held as an investment (b) $7,500
Sale of land held as an investment (c) $120,000
Sale of business car used for delivering goods (d) $19,000

Further information regarding the disposal of the partnership's assets
Qantas shares were purchased on 1 March 2020 for $11,600
Telstra shares were purchased on 22 November 2022 for $2,100
Land was purchased on 8 May 2010 for $70,000
The business car was purchased on 1 July 2020 and had an adjustable value of $10,500 at the time of disposal.

Other information: Nicole is also employed by an Australian Bank and earned a total salary of $70,000.

Required
What is the ITAA36 s 90 net income of the partnership?
How much is to be allocated to each partner?
What is the taxable income for Nicole and Sam who are equal partners of the N&S partnership?

Statement of Advice 2 - Calculate the franking account and tax payable by Technical Solutions Pty Ltd.

Jerry Seinfeld is a director of Technical Smart Solutions Pty Ltd, an Australian resident private company, with a corporate tax rate for imputation purposes for the 2022/23 income year of 30%.

Jerry provided you with the following information regarding the company's franking account:

Date	Transactions	Amounts
1 July 2022	Opening balance	$400
30 August 2022	Tax refund from 2022 company tax return	$4,500
20 October 2022	GST paid relating 2022 financial year	$19,000
11 November 2022	PAYG instalment paid relating September quarter 2022	$1,300
28 December 2022	Paid fully franked dividend	$10,000
2 February 2023	Received fully franked dividend from Australian company	$6,000
27 February 2023	PAYG instalment paid relating December quarter 2023	$1,300
25 May 2023	PAYG instalment paid relating March quarter 2023	$1,300
28 June 2023	Paid unfranked dividend	$10,000

Other information
Benchmark franking percentage for Technical Solution Pty Ltd is 100%
Technical Solutions Pty Ltd has a taxable income of $27,000 for 2022/23.

Required

Prepare Technical Solutions Pty Ltd's franking account for the 2022/23 tax year (you must use the running balance table to complete the franking account) and explain/advise any consequences arising from the franking account balance at 30 June 2023.

Calculate net tax payable (refundable) for the company.

Reference no: EM133640071

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