Bill is in Partnership with a professional colleague and they run a successful business. For the 2015 tax year the partnership had a profit of $125,000. The Partnership Agreement specifies that the Bill and his colleague have equal interest in the Partnership.
The Partnership Agreement also reflects a clause allowing Bill to pay himself a wage of $50,000 for his daily management of the business in addition to his half share of profits. Note that the above profit of $125,000 has had Bill’s wage of $50,000 deducted from it.
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Get Help Now!a. Calculate the net income of the partnership with reference to tax legislation; 1 marks b. Calculate the net income allocation to each partner with reference to tax legislation and Taxation Rulings (where relevant). 2 marks Bill also runs a successful business with some friends.
At the time of commencing the business, their tax accountant advised them to run the business through a trust structure. For the 2015 tax year the Distribution Minutes of the Trust reflected a beneficial distribution to Bill of $60,000 of the trust’s law income. Bill is a healthy 28 year old entrepreneur with no disabilities and resident of Australia.
c. Discuss whether you believe Bill has any present entitlement to any of the trust law income citing tax legislation and case law (where relevant) 2 marks d. Provide the correct classification of the above distribution under tax law income and support your answer with reference to tax legislation.
Advise who would be taxed and at what rate.
2 marks As a result of Bill’s entrepreneurial activities he was able to invest in a private company some years ago.
For the 2015 tax year Bill receives a $12,000 dividend from the company. The directors of the company declared the dividend be partially franked at a benchmark franking percentage of 80%. Bill’s marginal tax rate is 19%. e. Advise what section this dividend is taxed under 0.5 marks
f. Calculate Bill’s taxable income and resulting tax position (tax refund or tax payable). Include relevant tax legislation to support your answer. Ignore the Medicare levy. 2.5 marks
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