Nicol, Mason and Zara operate a coffee shop in partnership. They have agreed and prepared a deed to share profits and losses from the partnership as below: Nicol 25% Mason 40% Zara 35% Nicol and Mason, who work in the partnership business, withdrew a salary of $35,000 each from the business for the tax year ending 30 June 2021. Zara did not receive any salary, however, she was paid $25,000 interest on her contribution as capital investment to the partnership business. Upon considering the above-mentioned payments for the tax year ended 30 June 2021, the partnership had profits of $112,000 in its account. This amount included a fully franked cash dividend of $9,000 (received from a large company with a corporate tax rate of 30%) but did not include the associated franking credit. Additional Information for the 2020-21 tax year: Nicol is 28 years old. She is single and has private health insurance with no dependents. Her other income consisted of $8,600 interest from a bank account. She also had a net rental income of $16,500 from her investment property. Mason is 33 years old and has private health insurance with no dependents. He also received $13,000 in cash dividends from his investment in Rio Tinto’s fully franked shares. During the current tax year, he incurred $6,200 interest expense on the loan he obtained to purchase those Rio Tinto shares. Zara is 67 years old, has private health insurance and no dependents. She has an investment property income of $21,500 from a holiday home and an annual pension from a complying superannuation fund of $49,000 (a private super fund). Her annual costs on the investment property consisted of $4,500 in general expenses and $13,500 in interest expenses. Please note that all three partners are Australian tax residents. 

Required: 

For the tax year ended 30 June 2021:

1. Calculate the partnership net income

2. Calculate the distribution to each partner through the given table

3. Calculate each partner's taxable income and tax payable (refundable) through the given table

Answer rating: 100% (QA)

1 112000 9000 27000 94000 2 Nicol 112000 25 28000 28000 35000 sa... View the full answer