QUESTION 1

Which of the following items about partnerships for tax purposes is least correct?

a) Interest on a commercial loan made by a partner to the partnership for working capital is an allowable deduction of the partnership.

b) A partnership does not include the capital gain on the sale of a partnership asset in its net income in accordance with s106-5 ITAA 1997.

c) A partnership lodges an income tax return but is not liable to pay tax on its net income.

d) Spouses jointly owning one rental property can agree to split the net income for tax purposes regardless of their percentage ownership interests.

e) A partnership will exist for tax purposes even where there is no written partnership agreement.

QUESTION 2

Which of the following statements about companies is least correct?

a) A company carrying on business in Australia or deriving property income must appoint a Public Officer.

b) Company tax returns are subject to full self-assessment.

c) A company listed on the Australian Stock Exchange is a public company for tax purposes even if it has only 18 shareholders.

d) Dividends from a company are assessable income to resident shareholders even if the company has paid income tax at 30% on its profits.

e) Company losses are carried forward and cannot be distributed to shareholders in the year incurred.