Lorenzo and his wife, Antheia, carry on business in partnership. The partnership engages in two activities: property development and trading in clothes. The partnership agreement provides that: Lorenzo is entitled to an annual salary of $15,000; interest is payable on capital account; and any residue is to be shared in the proportions 70% to Lorenzo and 30% to Antheia. Apart from her capital investment in the business, Antheia lent a total of $4,000 to the business for use in property development and in May of the current tax year, the business paid her $500 interest on this amount. During the current tax year, Lorenzo and Antheia were each paid $1,000 interest on their capital investment in the business. The business earned $52,150 on its property development and paid out $7,500 in agents commissions. The clothes trading produced an income of $120,300 and expenses attributable to this aspect of the business totalled $108,500. The partnership also received dividends of $3,500 franked to 90%. Additional information: Lorenzos personal records disclose: Cash prize received from MasterChef Australia, a reality competitive cooking game show: $100,000 Net wages as a part-time university lecturer (excluding PAYG tax instalments of $2,000): $5,000 Parking fees incurred while travelling to university to teach: $1,700 Donation to Cancer Council Australia and received a handmade calendar in return: $80 Purchased textbooks for preparing teaching materials: $250 He depreciated textbooks. Payment to tax agent for providing income tax advice on setting up a new business: $200 a) Prepare a statement of net partnership income. b) Prepare a partnership distribution statement. c) Prepare a statement of tax liability for Lorenzo. d) Provide explanation ONLY for receipts and expenditures that are EXCLUDED during the preparation of the statement of tax liability in part (c) i.e. totally non-assessable income and totally denied deductions. You are NOT required to explain partially non-assessable income and partially denied deductions due to apportionment rule. Support your answer with reference to relevant income tax legislation, case law and rulings.

Lorenzo and his wife, Antheia, carry on business in partnership. The partnership engages in two activities: property development and trading in clothes. The partnership agreement provides that: Lorenzo is entitled to an annual salary of $15,000; interest is payable on capital account; and any residue is to be shared in the proportions 70% to Lorenzo and 30% to Antheia. Apart from her capital investment in the business, Antheia lent a total of $4,000 to the business for use in property development and in May of the current tax year, the business paid her $500 interest on this amount. During the current tax year, Lorenzo and Antheia were each paid $1,000 interest on their capital investment in the business. The business earned $52,150 on its property development and paid out $7,500 in agents' commissions. The clothes trading produced an income of $120,300 and expenses attributable to this aspect of the business totalled $108,500. The partnership also received dividends of $3,500 franked to 90%. Additional information: Lorenzo's personal records disclose: Cash prize received from MasterChef Australia, a reality competitive cooking game show: $100,000 Net wages as a part-time university lecturer (excluding PAYG tax Lorenzo s personal records disclose: Cash prize received from MasterChef Australia, a reality competitive cooking game show: $100,000 Net wages as a part-time university lecturer (excluding PAYG tax instalments of $2,000): $5,000 Parking fees incurred while travelling to university to teach: $1,700 Donation to Cancer Council Australia and received a handmade calendar in return: $80 Purchased textbooks for preparing teaching materials: $250 He depreciated textbooks. Payment to tax agent for providing income tax advice on setting up a new business: $200 b) Required: a) Prepare a statement of net partnership income. Prepare a partnership distribution statement. c) Prepare a statement of tax liability for Lorenzo. d) Provide explanation ONLY for receipts and expenditures that are EXCLUDED during the preparation of the statement of tax liability in part (c) i.e. totally non-assessable income and totally denied deductions. You are NOT required to explain partially non-assessable income and partially denied deductions due to apportionment rule. Support your answer with reference to relevant income tax legislation, case law and rulings. Lorenzo and his wife, Antheia, carry on business in partnership. The partnership engages in two activities: property development and trading in clothes. The partnership agreement provides that: Lorenzo is entitled to an annual salary of $15,000; interest is payable on capital account; and any residue is to be shared in the proportions 70% to Lorenzo and 30% to Antheia. Apart from her capital investment in the business, Antheia lent a total of $4,000 to the business for use in property development and in May of the current tax year, the business paid her $500 interest on this amount. During the current tax year, Lorenzo and Antheia were each paid $1,000 interest on their capital investment in the business. The business earned $52,150 on its property development and paid out $7,500 in agents' commissions. The clothes trading produced an income of $120,300 and expenses attributable to this aspect of the business totalled $108,500. The partnership also received dividends of $3,500 franked to 90%. Additional information: Lorenzo's personal records disclose: Cash prize received from MasterChef Australia, a reality competitive cooking game show: $100,000 Net wages as a part-time university lecturer (excluding PAYG tax Lorenzo s personal records disclose: Cash prize received from MasterChef Australia, a reality competitive cooking game show: $100,000 Net wages as a part-time university lecturer (excluding PAYG tax instalments of $2,000): $5,000 Parking fees incurred while travelling to university to teach: $1,700 Donation to Cancer Council Australia and received a handmade calendar in return: $80 Purchased textbooks for preparing teaching materials: $250 He depreciated textbooks. Payment to tax agent for providing income tax advice on setting up a new business: $200 b) Required: a) Prepare a statement of net partnership income. Prepare a partnership distribution statement. c) Prepare a statement of tax liability for Lorenzo. d) Provide explanation ONLY for receipts and expenditures that are EXCLUDED during the preparation of the statement of tax liability in part (c) i.e. totally non-assessable income and totally denied deductions. You are NOT required to explain partially non-assessable income and partially denied deductions due to apportionment rule. Support your answer with reference to relevant income tax legislation, case law and rulings