Calculate the net income of the partnership and the distribution to each partner.
You are required to present a complete analysis, briefly explaining the treatment of all items and/or elements in this question, including references to appropriate legislation, case law and/or tax rulings. Disregard GST.

Rex and Bill carry on a partnership together with gross receipts for the current income year of $80,000. During the year the following payments were made: Purchases of trading stock Wages to employees Salary to Rex Lease payments relating to business premises $ 18,000 10,000 35,000 3,200 Rex and Bill share profits in the ratio of 3:1 (i.e., 75% to Rex, 25% to Bill). Stock on hand at the beginning of the year was $3,000 and at the end of the year was: $3,400 based on cost, $4,400 based on replacement value, and $6,600 based on market value. Rex and Bill wish to minimize their tax obligations, however, do not wish to take advantage of the small business concessions.