Harvey and Walter Bachynski operate a welding supply business as a partnership in Sackville, New Brunswick. Over the years, their sales territory has expanded steadily, as they maintain an efficient, customer-oriented business.
However, their success has created problems. More and more customers are demanding their services, and the time required to reach those customers has increased. The brothers feel that because of this, service to distant areas is suffering from a lack of efficiency. In response, during the current year, they opened their first service depot in Amherst, Nova Scotia, 50 km away, just across the provincial boundary.
The new depot is in rented premises. It maintains a supply of inventory and is staffed by two new employees. Because of the start-up costs, the new depot operation has suffered a loss of $20,000 in the current year. However, the brothers are convinced that they have made the right decision.
A summary of the partnership income statement for the year is provided in the following table:

The brothers are pleased with the profit, although a large portion of it is a result of their own efforts. As the business is a partnership of two individuals, the brothers do not pay themselves salaries. Instead, they simply draw out some of their profits for personal living expenses.
The net loss of $20,000 from the new depot is calculated in the following table:
Each brother has other sources of income that generate approximately $30,000 annually.
Required:
For each brother, determine the amount of taxable income that will be subject to provincial income tax in New Brunswick and Nova Scotia for 20X1.

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S400,000 100,000 300,000 Sales Cost of sales Gross profit Expenses Salaries and wages Travel and delivery Rent Advertising and promotion Office and supplies $100,000 20,000 12,000 4.000 2,000 4.000 6.000 Insurance Utilities 148,000 152,000 Net loss from new depot operation (20,000 Net income before taxes S132.000