Question
Gary Goodman is your client, for the 2018/19 tax year. Gary along with Donya and Gisele are equal partners in a fashion design business trading
Gary Goodman is your client, for the 2018/19 tax year. Gary along with Donya and Gisele are equal partners in a fashion design business trading as De la Mode. De la Mode received $750,400 from fees for design services provided
this year and collected a further $210,200 from invoices outstanding from last financial years services. De la Mode paid a salary to the secretary Olivia of $55,000 per annum, paid $26,000 in rent for the business premises and a further $185,000 in other business expenses. As a mark of recognition for Garys pivotal role in securing a government contract for the business the partnership agreed to give Gary a $70,000 bonus payment.
Explain with appropriate discussion of relevant case law, legislation and calculations the tax consequences of this arrangement for Gary.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started