Question 4(7 marks)

Haris and Jenish are partners, carrying on a business as a partnership. The partnership agreement provides that Haris is to be paid an annual salary of $40,000. The balance is to be distributed equally between Haris and Jenish. The partnership agreement also provides that the partners are to share the losses equally in the case of losses. Thepartnerships assessable income for the income year is $100,000. Deductible expenses are $120,000. (Maximum 400 words)

Required:

What are the tax consequences for the partnership and each partner?

(Maximum 200 words)