Statement of Advice 1

Partnership net income & distribution Your client Jack and Dustin at J & D Partners have attended your office to have their 2022-year tax return prepared.

Jack and Dustin are equal partners in J & D Partners partnership. Both have contributed equal amounts of capital ($50,000 each). Jack is a silent partner while Dustin spends most of the time working in the partnership business.

addition to the annual salary to Dustin, the partnership agreement provides the following:

Jack and Dustin will each receive interest at the rate of 15% per annum on their capital contribution.

Dustin will receive a salary of $35,000 per annum for the management of the business, and $4,000 per annum will be paid by the business into a superannuation fund for Jack.

All residual profits and losses will be shared equally between the Jack and Dustin.

The bookkeeper has provided the following information in relation to the partnership for the 2021/22 tax year:

Sales $500,000 Interest on capital constitutions Jack and Dustin $15,000 Cost of Sales $200,000 Dustins Salary $35,000 Jacks superannuation $4,000 Lease of car $9,000 Other operating expenses $60,000 Capital gain $120,000

Other Information

1) Capital gain on land: the land was purchased 6 years ago for $80,000 and sold for $200,000

2) A car was leased for the business and this car has been used solely by Dustin, who has used the car 90% for business and 10% for private use.

Required Advise Jack and Dustin what is the ITAA36 s90 net income of the partnership and each partners taxable income for 2022. You must provide all workings (details) to determine the partnership net income as well as individual partners assessable income.

Advice on Trust income and distributions

Your client Joanne Tran has attended your office to have his 2022-year tax return prepared.

Joanne is the trustee of an Australian resident trust estate created by a Trust Deed. She created the trust for the benefit of her sons, James aged 18 years and Lisa aged 16 years. They are both residents of Australia. Joanne provided the following information regarding the trust for the 2021/22 income tax year.

Net rental income from various investment $57,000

Fully franked dividend received $4,300

Other information

James stays home with Joanne and does not intend to go to university and received a job seeker payment of $8,890 from Centrelink during 2021/22 tax year.

Lisa is a full-time high school student and earned $4,000 working at local restaurant during school holidays.

Required Advise Joanne the taxation implications (base tax payable by the trustee and/or each beneficiary) if she distributes the trust net income to each beneficiary at 50% each. Do not need to include Medicare levy or any tax offsets.