a) Calculate the net income of the partnership b) Explain how you would calculate Mohan's assessable income, including his distributions from the partnership. C) Explain how you would calculate Preti’s assessable income, including her distributions from the partnership.
Mohan and Preti are conducting a business as partners selling hot chocolate drinks to early rising students. Their
The partnership agreement provides that both partners are entitled to receive an annual salary of $50,000 and Preti is entitled to interest of $60,000 per annum because she contributed $1 million at the start of the business to the partnership capital account.
During the 2021 tax year Mohan received wages of $75,000 from his job as a gardener. Preti received $65,000 in unfranked dividends on her shares in Apple. Both of these transactions were unrelated to the partnership.
At the end of the 2021 tax year, their partnership business shows the following transactions:
Income from their partnership business: $920,000
General Expenses in running the partnership business $360,000
Salaries and entitlements for staff (other than for the partners): $240,000
Salary for Mohan: $50,000
Salary for Preti: $50,000
Interest on capital account to Preti: $60,000
Required:
Assuming these are the only relevant transactions for Mohan and Preti, answer the following questions in relation to the year ended 30 June 2021.
a) Calculate the net income of the partnership
b) Explain how you would calculate Mohan's assessable income, including his distributions from the partnership.
C) Explain how you would calculate Preti’s assessable income, including her distributions from the partnership.
The answer must include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law and give reasons and calculations for your answer
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