Problem
Two partners, Joe and Mary, share profits in the ratio 1:3. Joe worked as the general manager and received $20,000 salary. Mary did not receive any salary as she is not involved in daily business management, however, she was paid $13,000 interest on her contribution as capital investment to the partnership business.
The partnership returns show assessable income of $1,120,000 and other deductions of $1,000,000. The partnership returns included a fully franked cash dividend of $12,000 (received from a large company with a corporate tax rate of 30%) but did not include the associated franking credit.
Additional Information for the 2020-21 tax year:
Joe is 30 years old. She is single and has private health insurance with no dependents. Joe also received $13,000 in cash dividends from her investment in BHP Billiton' s fully franked shares. and a net rental income of $13,500 from her investment property.
Mary is 68 years old, has private health insurance and no dependents. She has an investment property income of $17,500 and an annual pension from a complying superannuation fund of $46,000 (a private super fund). The investment property incurred $5,000 in general expenses and $14,500 in interest expenses.
Note that the two partners are Australian tax residents.
Task
For the tax year ended 30 June 2021:
A. Calculate the partnership net income.
B. Calculate the distribution to each partner through the given table.
Note: There is marks for identifying if there is 0 allocation of any source of income for partners in the partnership
C. Calculate each partner's taxable income and tax payable (refundable) through the given table.