Sian Suds (a resident of Australia) and Luke Suds (a non-resident) own a handcrafted soap shop in partnership and trade as ‘Suds’ Soaps’. Gross income for the current income year is $40,000. $8,000 of this amount was made on Suds’ Soaps’ sales outside Australia. No expenses are incurred for these sales. Business expenses of $25,000 include a salary of $5,000 paid to Sian. All expenses related to Australian source income.

Required B    

a). Assume that the assets of Suds’ Soaps are sold. How are capital gains or losses relating to partnership assets dealt with?

b). In your response give reasons and refer to sections of legislation and cases, where relevant.

Answer rating: 100% (QA)

Introduction S 453 and S 454 was brought in to the statute book to deem pooling of assets by partners into the firm and distribution of assets by the firm to partners on dissolution or otherwise as tr... View the full answer