Analyse data received from the client and identify any discrepancies. Conduct research to identify any updates to compliance requirements and prepare client working papers in accordance with accounting principles and practices.

The client's working papers should include the following tax documentation:

• calculation of partnership net income
• When completing the partnership net income, assume that for tax purposes SBE concessions have been applied in the previous 2 years and the cost of new assets have been fully expensed and that a private ruling has been obtained in respect of the salary to Milo and the commissioner of taxation will allow the amount in full.
• partnership distribution statement
• taxable income and tax payable for Jo and Morgan
• the sources from which the information to prepare the above was gathered.
• issues in which you require further advice or guidance to moderate the decision processes.

Dear Tax Agent,

It was great meeting you last week. Please find enclosed the partnership profit and loss statement, balance sheet and other information you requested relating to our 2022 partnership and individual income tax returns.

Partnership

• We do not use small business concessions but would like to minimise our tax liability.
• Our home address is a 221 Bedrock Street Northbridge 2063.
• Jo's TFN is 666 555 000.
• Morgan's TFN is 777 666 222.
• In addition to income from our regular clients, we also held shares in other companies as part of an investment portfolio.
• Total loan repayments made to Jo were $75,000 including $58,000 interest.
• The opening balance of accounts receivable was $40,000.

We would also like you to consider the following as we believe they may affect our tax returns.

Included in the salary and wages is $20,000 paid to our daughter Milo (age 17), Milo works on reception for us 3 afternoons a week after school. She worked for 48 weeks of the year. Can we claim all of this?

As discussed with you we sold the 4,000 shares, which were held in the partnership. You mentioned that we might have to pay capital gains tax on this. How do we do that? We received $4,850 from the disposal on 20/06/2022 after $160 agent fees. The shares were acquired on 1 July 2019 at $1 per share.

During the year, we spent $20,000 on new office furniture. We have included these in our plant and equipment in our balance sheet.

We regularly meet with clients over coffee or lunch, which the partnership pays for. Jo estimates we spent $450 throughout the income year on entertainment expenses.

During the year, we took out the following amounts for personal expenses:

• Jo - 85,000.
• Morgan - 105,000.

A receipt has also been obtained for a donation of $1,500 made by Jo to the RSPCA.

Together, we have previously worked with another accountant in managing our personal tax returns for the 2022 income year. The invoice included $500 in professional services relating to tax advisory, which is split between us.

We both had private hospital cover for the full year.

As discussed, we authorise you to prepare our 2023 partnership and individual tax returns. Please let us know if you have any further questions.

Kind regards,

Jo and Morgan.

Profit and Loss Statement

J&M Consulting P&L

J&M Consulting Profit and loss statement for the year ending 30 June 2023	$	$
Income
Cash sales	680,000
Fully franked dividends	21,000
Bank interest	3,500
Proceeds from sale of 1000 shares (Sold 20 June 2022)	5,000
Interest on drawings - Jo	7,650
Interest on drawings - Morgan	9,450	726,550
Less Expenses
Bank charges	250
Entertainment expenses	450
Rent of office premises	225,000
Salary to Jo	90,000
Salary to Morgan	60,000
Other wages	40,000
Superannuation contributions on behalf of Jo	20,000
Superannuation contributions on behalf of Morgan	15,000
Bad debts	2,200
Office overhead expenses	32,000
Depreciation	25,000
Interest on Capital - Jo	21,000
Interest on Capital - Morgan	15,000
Interest on Loans - ABC Finance	17,000
Interest on Loans - Jo	58,000	620,900
Net profit		$105,650

Balance Sheet

J&M Consulting balance sheet

J&M Consulting Balance sheet as at 30 June 2023	$	$
Current assets		214,000
Cash at bank	154,000
Deposits at call	25,000
Debtors	35,000
Non-current assets		179,000
Plant and equipment	254,000
Less accumulated depreciation	75,000
Total assets		393,000
Current liabilities		45,000
Loan - Jo	30,000
Creditors	15,000
Total liabilities		45,000
NET ASSETS		348,000
Partners equity		348,000
Capital - Jo	203,000
CapitalMorgan	145,000

• Calculate Partnership Net Income
• Calculate Distribution Statement
• Calculate Individual Tax Calculations
• Further Advice