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Question 9 (15 marks) Put and Call operate a hairdressing salon as partners. Put is entitled to 65% of the profits after allowing for partner's
Question 9 (15 marks) Put and Call operate a hairdressing salon as partners. Put is entitled to 65% of the profits after allowing for partner's salaries, interest on capital, interest on advances and interest on drawings. Call is entitled to 35% of the profits. For the 2020/21 income year, the partnership derives $318 000 of sales and incurred $107 000 of expenses. The expenses included the purchase of a new hair curling megadevice for $8000. The megadevice was acquired on 1/11/18. It has an effective life of 4 years and is depreciated using the diminishing value method. The partners use the device 25% of the time for private purposes. Put and Call paid themselves wages of $75 000 and $80 000 respectively. In addition Put received $6 500 interest on capital and paid $1750 interest on her drawings to the partnership Call loaned money to the partnership and was paid $17 500 interest on the loan. Call was also paid $7000 interest on capital and paid $2500 interest on drawings to the partnership Required a) With reference to the relevant law, calculate the decline in value deduction associated with the megadevice b) Calculate the s90 Partnership Net Income (PNI) and complete a partnership schedule showing the overall distribution to each of the partners. Name IOC IOD Salary Distribution Total c) Calculate the taxable income and the tax assessed on taxable income for Call Assessable income Minus Allowable deductions = Taxable income Tax payable on taxable income Minus non refundable tax offsets = Net tax payable Plus Medicare Levy 2% Minus refundable tax offsets = Total amount of tax payable Minus Tax Credits (PAYG tax paid) = Refund Due or Amount Owing
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