Reference no: EM133205574
Question 1
Ben Smith and Elias Jones commenced a partnership in a business erecting pergolas and garden furniture. After their first year of trading they showed a net profit of $50 000. In their partnership agreement, profits are shared equally between the partners after adjusting for the following:
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Partners salaries
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Smith $10 000, Jones $10 000
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Interest on capital
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Jones $5000
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Interest paid on advance from Smith
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$3000
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Interest on drawings
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Jones $2000
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Required:
(a) Calculate s.90 partnership net income.
(b) Write a distribution statement.
(c) Calculate assessable income.
Question 2
Franco is the owner of a garden maintenance and landscaping business which services the Perth metropolitan area. He drives a Holden Vitoria Utility which he purchased in 2006 at a cost of $32 000. It has a 3200-cc capacity engine and it is primarily used for picking up supplies and transporting materials and tools to his various jobs.
Frank was conscientious with his record keeping and for this reason kept a comprehensive log book for the current tax year.
Information included in his log book included the following:
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Travel to suppliers and customers
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2300 km
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Travel from home to work
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1890 km
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Private family travel
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160 km
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Total
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4350 km
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Franco's running costs for the year including the decline in value (depreciation) totalled $12 800.
Required:
(a) Using the information above, calculate the maximum amount that Frank would be able to include as a deduction for car expenses for the year from the methods available to him.
(b) What other vehicles are treated in the same way as Franco's?
Question 3
Lauren works as a real estate agent for the Professionals Perth. Her work requires her to travel between various client meetings and properties. Lauren purchased a 2200-cc Holden Astra in July at a cost of $18 500. She had additional expenses for registration and insurance of $1200.
During the same tax year, Lauren incurred the following expenses:
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$
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Petrol
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5000
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Parking
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50
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Car washes
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200
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Parking fines (client premises)
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450
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Freeway tolls (work-related travel)
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230
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Taxi fares from work Christmas party
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50
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Taxi fares to work while car is being repaired
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400
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Gas conversion for the Astra
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2300
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Car loan repayments (includes interest of $2500)
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6800
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Insurance excess (car accident)
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400
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Any calculation for depreciation will be calculated using the diminishing value method.
What is the total of Lauren's allowable car expenses for the purposes of using Division 28 methods of calculations?
Question 4
Susan Gibney is a resident individual taxpayer.
During the tax year, Susan derived total income of $85 000 of which $6000 was exempt income.
Susan's deductions for the year also totalled $7000.
The following tax rates are applicable to determine tax payable for Susan
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Taxable income
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Tax on this income
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$18,201 - $37,000
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19c for each $1 over $18,200
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$37,001 - $90,000
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$3,572 plus 32.5c for each $1 over $37,000
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$90,001 - $180,000
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$20,797 plus 37c for each $1 over $90,000
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$180,001 and over
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$54,097 plus 45c for each $1 over $180,000
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Require
(a) What is Susan's assessable income?
(b) What is Susan's taxable income?
(c) What tax-free threshold applies to Susan?
(d) If Susan were a non-resident for tax purposes, what tax-free threshold would she receive?
(e) Calculate Susan's basic tax on taxable income.
(f) What can Susan do if she requires advice on her decision-making process with respect to the tax matters?