Assessable Tutorial Response for Week 10

3 Found helpful • 9 Pages • Essays / Projects • Year: Pre-2021

TUTORIAL 10, WEEK 11 All references to divisions, subdivisions, section numbers, sub-section numbers, in both the text and footnotes, are to the Income Tax Assessment Act 1997, unless stated otherwise. Problem One Part A Under s 995-1(1)1, John Bonner (“J”) and Bonner Pty Ltd (“B”) is said to be carrying on a business as partners and in the income year of 2013-14, the partnership has made a tax loss, where there is an excess of deduction over assessable income2. This tax loss is allocated through to each partner under s 92(2)3 as based off their individual interest and as there is no other agreement evident, J will receive 70% of the partnership loss and B will receive 30%. In order to calculate the net loss, the partnership is first treated as a single accounting entity before allocating the tax loss to the partners as a deduction inclusion to their personal assessable incomes. Under s6-54, Receipts include interest and the business receipts under calculating accounting profit; all receipts however are to be accounted for at a partnership level, including the dividend distribution of $12,600 deemed as assessable income under s 445 as well as the gross up for franking credits attached to the dividend distribution under s 207-35(1)6 of $4,3207. Business expenses and interest on loan to purchase shares are both deductible expenses8 but it is noted that the depreciation under s 40-259 for $24,000 is also taken into account in calculating the net loss. Total receipts minus allowable deductions will bring the net loss figure to $27,08010.

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