Tom and Mary are Australian residents in partnership as retailers of computer parts. The partnership records...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Tom and Mary are Australian residents in partnership as retailers of computer parts. The partnership records for the financial year ending 30 June 2017 disclose Receipts: $200,000 20,000 20,000 10.000 40,000 10,000 Payments: $100,000 50,000 20,000 2,000 10,000 50,000 1,000 5,000 3,000 Gross receipts from trading Bad debts recovered Net Exempt Income Not Assessable Not Exempt Income Net capital gain (after discounting) from the sale of shares acquired in 2008 Dividend 50% franked (The company paying the dividend pays tax at 30%) Purchases of trading stock Partners' salary-Mary Partner's salary-Tom Interest on cash advance made to the partnership by Peter who is not a partner Travelling expenses in respect of Tom travelling from home to work Salaries and rent paid Legal expenses in recovering bad debts Borrowing expenses on a loan used to acquire an income earning building. The loan is for 6 years and began on 1 July 2015 Painting business premises in June 2017 Other details: a) Tom and Mary share the residual profits and losses equally. b) Trading stock on hand 1 July 2016: $60,000. c) Trading stock on hand 30 June 2017 using the LIFO method: $50,000 (at market selling value). $45,000 (at replacement cost), and $40,000 (at cost price). Trading stock on hand 30 June 2017 using the FIFO method: $100,000 (at market selling value), $80,000 (at replacement cost), and $70,000 (at cost price). The partners wish to minimise their tax liability for the year ended 30 June 2017. d) The partners made a partnership net trading loss of $15,000 in the income year ending 30 June 2016. e) On 10 January 2017 Tom was robbed at gunpoint of the partners' trading receipts of $20,000 while on the way to the bank. QUESTION THREE (continued) f) During the 2016/2017 income year, Tom received a net salary of $20,000 as a part-time lecturer at Monash University, after PAYG of $5,000 tax was deducted from his salary by the university. g) Frank and his brother, both contribute $10,000 each to the maintenance of their father. Their father is a permanent resident of Australia and received adjusted taxable income of $4,282 for the year ending 30 June 2017. Their father is an invalid and receives a disability support pension. h) Tom has an unabsorbed $5,000 capital loss from the sale of shares from the 2015/2016 income year. He also has an unabsorbed $2,000 capital loss from the sale of a painting from the 2014/2015 income year. i) Tom has a carry forward Division 36 loss from a previous income year of $15,000. i) During the tax year Tom made a gift of $1,000 to the Collingwood Football Club and a gift of $1,000 to the Red Cross. k) Tom is not a member of a Private Health Fund and does not have private hospital insurance. 1) All figures are exclusive of GST. GST can be ignored for this question. REQUIRED Calculate Tom's Assessable Income from the partnership and then calculate his taxable income and Net Tax Payable for the income year ending 30 June 2017. Figures can be rounded to the nearest dollar. You should briefly explain your treatment of the items in this question. For example: Item $4,000 Conference expense Explanation Deductibles. 8-1, revenue expense incurred in the production of assessable income. - Finn v FCT (25 marks) Tom and Mary are Australian residents in partnership as retailers of computer parts. The partnership records for the financial year ending 30 June 2017 disclose Receipts: $200,000 20,000 20,000 10.000 40,000 10,000 Payments: $100,000 50,000 20,000 2,000 10,000 50,000 1,000 5,000 3,000 Gross receipts from trading Bad debts recovered Net Exempt Income Not Assessable Not Exempt Income Net capital gain (after discounting) from the sale of shares acquired in 2008 Dividend 50% franked (The company paying the dividend pays tax at 30%) Purchases of trading stock Partners' salary-Mary Partner's salary-Tom Interest on cash advance made to the partnership by Peter who is not a partner Travelling expenses in respect of Tom travelling from home to work Salaries and rent paid Legal expenses in recovering bad debts Borrowing expenses on a loan used to acquire an income earning building. The loan is for 6 years and began on 1 July 2015 Painting business premises in June 2017 Other details: a) Tom and Mary share the residual profits and losses equally. b) Trading stock on hand 1 July 2016: $60,000. c) Trading stock on hand 30 June 2017 using the LIFO method: $50,000 (at market selling value). $45,000 (at replacement cost), and $40,000 (at cost price). Trading stock on hand 30 June 2017 using the FIFO method: $100,000 (at market selling value), $80,000 (at replacement cost), and $70,000 (at cost price). The partners wish to minimise their tax liability for the year ended 30 June 2017. d) The partners made a partnership net trading loss of $15,000 in the income year ending 30 June 2016. e) On 10 January 2017 Tom was robbed at gunpoint of the partners' trading receipts of $20,000 while on the way to the bank. QUESTION THREE (continued) f) During the 2016/2017 income year, Tom received a net salary of $20,000 as a part-time lecturer at Monash University, after PAYG of $5,000 tax was deducted from his salary by the university. g) Frank and his brother, both contribute $10,000 each to the maintenance of their father. Their father is a permanent resident of Australia and received adjusted taxable income of $4,282 for the year ending 30 June 2017. Their father is an invalid and receives a disability support pension. h) Tom has an unabsorbed $5,000 capital loss from the sale of shares from the 2015/2016 income year. He also has an unabsorbed $2,000 capital loss from the sale of a painting from the 2014/2015 income year. i) Tom has a carry forward Division 36 loss from a previous income year of $15,000. i) During the tax year Tom made a gift of $1,000 to the Collingwood Football Club and a gift of $1,000 to the Red Cross. k) Tom is not a member of a Private Health Fund and does not have private hospital insurance. 1) All figures are exclusive of GST. GST can be ignored for this question. REQUIRED Calculate Tom's Assessable Income from the partnership and then calculate his taxable income and Net Tax Payable for the income year ending 30 June 2017. Figures can be rounded to the nearest dollar. You should briefly explain your treatment of the items in this question. For example: Item $4,000 Conference expense Explanation Deductibles. 8-1, revenue expense incurred in the production of assessable income. - Finn v FCT (25 marks)
Expert Answer:
Related Book For
Principles of Taxation for Business and Investment Planning 2016 Edition
ISBN: 9781259549250
19th edition
Authors: Sally Jones, Shelley Rhoades Catanach
Posted Date:
Students also viewed these accounting questions
-
For the financial year ending 30 June 2020, Malkin Ltd has some liability issues for which it seeks your help: a) The company sells widgets and provides a one-year warranty. 100,000 widgets were sold...
-
Tom and Mary are Australian residents in partnership as retailers of computer parts. The partnership records for the financial year ending 30 June 2017 disclose Receipts: $200,000 20,000 20,000...
-
6. On January 1, Puckett Company paid $1.6 million for 50,000 shares of Harrison's voting com- mon stock, which represents a 40 percent investment. No allocation to goodwill or other spe- cific...
-
In a study it is observed that the right ovary ovulates more than the left, all are possible explanation for the cause except a) Anatomical difference between right and left side b) Difference in...
-
Global Defense is a manufacturer of military equipment. Its Santa Fe plant manufactures the Interceptor Missile under contract to the U.S. government and friendly countries. All Interceptors go...
-
Peanut-Fresh Inc. produces all-natural organic peanut butter which is sold in 340-gram jars. The sales budget for the first four months of the year is as follows: Company policy requires that ending...
-
Make decisions in the situations described in the Ethical Behavior Worksheet. You will not have all the background information on each situation; instead, you should make whatever assumptions you...
-
Baxter Inc., a developer of radiology equipment, has stock outstanding as follows: 18,000 shares of cumulative 2%, preferred stock of $75 par, and 40,000 shares of $10 par common. During its first...
-
DATABASE SYSTEMS What is a key and how is it important in a relational model?
-
Consider the information for Evans, Inc. when the company entered bankruptcy proceedings: Account Balance per Books Dr (Cr) Cash $30,500 Accounts receivable 600,000 Inventory 100,000 Prepaid expenses...
-
You're trying to save to buy a new $191,000 Ferrari. You have $41,000 today that can be invested at your bank. The bank pays 4.9 percent annual interest on its accounts. How long will it be before...
-
In the life-cycle consumption model a person saves during their middle career working period and dissaves in their earlier career and retirement periods. Can you use a good example to argue this...
-
1. Dollar Cost Averaging Go to https://www.cnbc.com/2022/01/28/worlds-richest-people-have-lost-money-in-2022-except-warren-buffett.html and read the article. a. What are some of Buffet's investment...
-
In this module, we discuss fiscal policy and how it can be implemented in a recessionary gap or inflationary gap. Recently, COVID-19 has resulted in many government officials issuing executive orders...
-
Explain two things that did not work for you in this macroeconomic class and why you struggled with them
-
The number of patient records coded by a facility's coding staff in a week would be an example of a: (check all that apply) Question options: Financial indicator Performance indicator Structure...
-
Which of the Brand Direc$ons best meets the goals of the brand vision? Brand Direc on 1 Brand Direc on 2 Why do you think your selected Brand Direc$on meets the goals the best?
-
The comparative statements of financial position of Menachem NV at the beginning and end of the year 2019 appear below. Net income of ¬34,000 was reported, and dividends of ¬23,000 were paid...
-
Issue Recognition Problems Identify the tax issue or issues suggested by the following situations and state each issue in the form of a question. Mr. and Mrs. JC were married in 1995. This year they...
-
For many years, Mr. K, the president of KJ Inc., took the corporations most important clients to lunch at Als Steak House several times a week. However, after the tax law was amended to disallow a...
-
Ms. GW, an unmarried taxpayer, had the following income items: Salary ..$33,400 Net income from a rental house .. 3,200 Ms. GW has a four-year-old son, who attends a day care center while she is at...
-
Select an information system with which you are familiar, and which you feel needs to be improved, based upon your experiences as an employee, customer, other system user, or system owner, Switch...
-
You have learned the importance of making sure that requirements are correctly identified. Hut how do you know when you have a correct requirement-that is, what criteria must each requirement meet in...
-
Prepare a full feasibility analysis, including Economic, Operational, Schedule, Legal, and Technical analyses for the system you are suggesting in problem 1. Your analysis should be no more than 30...
Study smarter with the SolutionInn App