Advise Howitt and Robin of the tax implications arising from the above fact situation for the...

   

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Advise Howitt and Robin of the tax implications arising from the above fact situation for the year ended 30 June 2022 by answering the following questions: Calculate the net income of the partnership. (18 marks) Calculate the amount to be included in each partner's personal income tax return arising from the partnership. (4 marks) You are required to present a complete analysis, briefly explaining the treatment of all items and/or elements in this question, including references to appropriate legislation, case law and/or tax rulings. Disregard GST. Additional information: The dividend is a 20% franked dividend from a publicly listed company. Stock on hand on 1 July 2021 was $68 000. Stock on hand on 30 June 2022 is valued at $97 000 (cost), $101,000 (replacement value) and $115,000 (market selling value). In accordance with the partnership agreement. Repairs relate to the rectification of sections of damaged wall plastering from floods during the year. The business is eligible for full expensing of depreciable assets and the depreciable assets acquired are eligible for full expensing. During the year, Howitt and Robin sold trading stock that cost $15,000 (market value of $45,000) to friends for $30,000. The purchase price has been included in the purchases figure and the proceeds of $30,000 received have been included in the gross sales above. Howitt and Robin note that for the year ended 30 June 2021, the partnership made division 36 losses of $26,000. Howitt and Robin also disposed of a depreciable asset, receiving $15,000 in sale proceeds. Due to the immediate write-off provisions in recent years, the assets adjustable value is nil. Howitt and Robin seek to minimise their tax liabilities. Howitt and Robin are Australian residents for tax purposes. They carry on a retail business 'HR Sports' in partnership together in regional NSW. Their partnership agreement states that the business profit (loss) is distributed as follows: Howitt: 60 per cent Robin: 40 per cent. During the year ended 30 June 2022, their activities included: Receipts: Gross sales Interest Income Cash Dividend (see note a) Payments: Purchases of trading stock (see note b) Wages to employees (excluding Howitt and Robin) Salaries paid to Howitt (see note c) Repairs (see note d) Club membership to the local golf club Purchase of depreciable assets (see note e) Other tax-deductible expenses 978,000 140 12,000 414,200 116,000 32,000 18,000 550 112,000 260,500 Advise Howitt and Robin of the tax implications arising from the above fact situation for the year ended 30 June 2022 by answering the following questions: Calculate the net income of the partnership. (18 marks) Calculate the amount to be included in each partner's personal income tax return arising from the partnership. (4 marks) You are required to present a complete analysis, briefly explaining the treatment of all items and/or elements in this question, including references to appropriate legislation, case law and/or tax rulings. Disregard GST. Additional information: The dividend is a 20% franked dividend from a publicly listed company. Stock on hand on 1 July 2021 was $68 000. Stock on hand on 30 June 2022 is valued at $97 000 (cost), $101,000 (replacement value) and $115,000 (market selling value). In accordance with the partnership agreement. Repairs relate to the rectification of sections of damaged wall plastering from floods during the year. The business is eligible for full expensing of depreciable assets and the depreciable assets acquired are eligible for full expensing. During the year, Howitt and Robin sold trading stock that cost $15,000 (market value of $45,000) to friends for $30,000. The purchase price has been included in the purchases figure and the proceeds of $30,000 received have been included in the gross sales above. Howitt and Robin note that for the year ended 30 June 2021, the partnership made division 36 losses of $26,000. Howitt and Robin also disposed of a depreciable asset, receiving $15,000 in sale proceeds. Due to the immediate write-off provisions in recent years, the assets adjustable value is nil. Howitt and Robin seek to minimise their tax liabilities. Howitt and Robin are Australian residents for tax purposes. They carry on a retail business 'HR Sports' in partnership together in regional NSW. Their partnership agreement states that the business profit (loss) is distributed as follows: Howitt: 60 per cent Robin: 40 per cent. During the year ended 30 June 2022, their activities included: Receipts: Gross sales Interest Income Cash Dividend (see note a) Payments: Purchases of trading stock (see note b) Wages to employees (excluding Howitt and Robin) Salaries paid to Howitt (see note c) Repairs (see note d) Club membership to the local golf club Purchase of depreciable assets (see note e) Other tax-deductible expenses 978,000 140 12,000 414,200 116,000 32,000 18,000 550 112,000 260,500

Answer rating: 100% (QA)

Net Income Calculation for HR Sports Partnership Year Ended 30 June 2022 Income Gross Sales 978000 I... View the full answer