Stephen and Caroline Harris are married and live in Melbourne. They jointly own a ownhouse in Hawthorn which is rented to tenants and generated $35,000 rental income at the end of the 201W/1X income year. By 30 June 201X, they had paid $5,500 in interest associated with apartment's mortgage and had also spent $2,500 fixing the bathroom's plumbing system. Real estate management fees amounted to $4,700 and were paid in the current income year. As Caroline is not currently working, they decided to split the profits at a rate of 75% for Caroline and 25% for Stephen. If there are losses, they agreed that Stephen is to take 75% and Caroline would take only 25%. Required (a) Advise Stephen and Caroline of the income tax implications arising from the above arrangements for the year ending 30 June 201X, applying legislation and case law to support your answer (calculations not required). (8 marks) (b) Assuming the same facts as above, except that now Stephen and Caroline are carrying on a financial planning practice in the Hawthorn townhouse with a written partnership agreement according to which Stephen's interest is 25% and Caroline's interest is 75%. What would be the tax consequences in this case and how would the partnership net income be distributed? Support your answer and calculations with legislation and case (7 marks) law. $1-84