Question

Mr Kleenex and Ms Sorbent own and operate a tissue retail business. The partnership agreement indicates that Mr Kleenex is entitled to 60% of the profits and Ms Sorbent 40%

The accounting net profit for the year was $525,000. Selected items included in the Profit and Loss Account were:

Income

Franked dividends of $51,000 from public companies with franking credits of

$21,000 attached.

Unfranked dividends of $3,000 from public companies without franking credits attached.

Interest on drawings                                                                                                                 $

- Mr Kleenex                                                                                                                      1,250

- Ms Sorbent                                                                                                                         750

Expenses                                                                                                                              

Interest paid to Mr Kleenex for monies borrowed to purchase the above shares.         40,000

Salaries taken by Mr Kleenex and Ms Sorbent in their profit sharing proportions.        90,000

Interest paid on capital          

- Mr Kleenex                                                                                                                      2,250

- Ms Sorbent                                                                                                                      1,350

Superannuation paid for partners

- Mr Kleenex                                                                                                                    22,750

- Ms Sorbent                                                                                                                    13,850

Additional Information

Mr Kleenex taught personal hygiene classes to seniors each Wednesday and he received $5,000 for the financial year.

Required:

Calculate the net income of the partnership, the taxable income and net tax payable of each partner in the current year. You are not required to calculate the small business tax offset.

Question is based on Australian tax law