Hi,

Can you please help me with this question? I don't understand how the improvement allowance is calculated.

Thank you so much

Question 1 The following information relates to the partnership of Neil and Nicole for the year ended 30 June 2018. They share profits and losses 50/50, after salaries and interest on capital. Calculate the net income of the partnership, the distribution to each partner, Nicole's taxable income and her tax liability for 2017/18. Receipts Cash receipts during the year 650,000 Bank interest 3.500 Expenditure Wages to employees 84,000 Improvements to business premises ** 54,000 (commenced 30.04.2015, completed 15.07.2017) Drawings - Nicole 20,000 Salary to Neil 45,000 Interest on capital to Nicole 2,500 Superannuateon contributions to complying fund 20,000 ($10,000 per partner) Other (all allowable deductions) 94,000 NICOLE'S PERSONAL TRANSACTIONS WERE AS FOLLOWS: Fully franked dividends from St George Bank 1,200 Interest from Canada ($900 less $90 Canadian tax) 810 NOTE: You are not required to consider whether the receipts and expenditure above are GST inclusive or not.TUTORIAL 11 Q1 Neil and Nicole share profits and losses 50/50, after salaries and interest on capital a. Neil and Nicole Partnership 2017/2018 Income Cash receipts $650,000 Bank interest 3,500 Total income $653,500 Deduction+ Wages to employee $84,000 Improvement allowance 1298 (54000x2.5%x351/365) Other allowable deductions 94,000 Total $179,298 Net Income $474,202 Distribution to each partner Less salary and interest ($47,500) Superannuateon (20,000) Available 406,702 50% of balance $203,351