Lisa and Monica are Australian residents for tax purposes and operatea hairdressing salon as partners where they each are entitled to 50% of the profits after allowing for partner's salaries, interest on capital, interest on advances and interest on drawings.
For the current income year, the partnership derives $102 000 of sales and $9 272 in GST and incurred $44 000 of expenses. The expenses included the purchase of a new hair curling mega device which has an effective life of 7 years. However, it has not been unpacked and is not currently operational. The mega device cost $7000. The partnership always uses the Demising Value method to calculate Decline in Value deductions.
Lisa and Monica paid themselves a salary of $23 000 and $18 500 respectively. In addition Lisa received $3 000 interest on capital and paid $750 interest on her drawings.
During the income year the partnership sold some un-franked shares for $15 000. The shares had been bought in 2010 for $3000 and were held 75% by Lisa and 25% Monica
Monica was paid $3 500 interest on funds she advanced to the partnership. Monica also has a capital loss of $5000, $2000 of this is from the disposal of a collectible in a previous year.
Required
With reference to relevant legislation and/or case law:
a) Calculate the s90 Partnership Net Income (PNI) and complete a partnership schedule showing the overall distribution to each of the partners.
b) Calculate the taxable income and the tax assessed.