This is an income tax law question, I chose accounting as I didn't have an option provided to select 'Income Tax Law in Reference to Australian Law

Question 5 ( 15 marks)

Lisa and Monica are Australian residents for tax purposes and operate a hairdressing salon as partners where they each are entitled to 50% of the profits after allowing for partners salaries, interest on capital, interest on advances and interest on drawings.

For the current income year, the partnership derives $102 000 of sales and $9 272 in GST and incurred $44 000 of expenses. The expenses included the purchase of a new hair curling megadevice which has an effective life of 7 years. However, it has not been unpacked and is not currently operational. The megadevice cost $7000. The partnership always uses the Dimishing Value method to calculate Decline in Value deductions.

Lisa and Monica paid themselves a salary of $23 000 and $18 500 respectively. In addition Lisa received $3 000 interest on capital and paid $750 interest on her drawings.

During the income year the partnership sold some unfranked shares for $15 000. The shares had been bought in 2010 for $3000 and were held 75% by Lisa and 25% Monica

Monica was paid $3 500 interest on funds she advanced to the partnership. Monica also has a capital loss of $5000, $2000 of this is from the disposal of a collectible in a previous year.

Required

With reference to relevant legislation and/or case law:

1. Calculate the s90 Partnership Net Income (PNI) and complete a partnership schedule showing the overall distribution to each of the partners.

2. Calculate the taxable income and the tax assessed on taxable income for Monica

Appendix 1

Use the following templates to structure your analysis in questions 4, 5, 6 as required

Assessable income

Item	Yes	No	Legislative basis and explanation

Tax deduction

Item	Yes	No	Legislative basis and explanation

Tax calculation assistance

Item	Taxpayer	Taxpayer	Taxpayer
Assessable income
Allowable deductions
Taxable income
Non refundable tax offsets
Medicare Levy
Total Tax and Medicare Levy
PAYG credits
Other credits
Balance of the assessment