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Question 12 (20 marks) Taxation of partnership and partners Arun and his wife Anuna entired into a partnership with their 25-year-old son Tarun on 1 July 2016. They invested in a fashion boutique to be managed by Tarun (son). Arun and Aruna each contributed ditional $10000 capital to the business on 1 July 2015 on an agreement that the partnership would interes u m The partnerships agreed to pay Tarun an annual salary S100 000 with 10 wupera tion on this salary for managing the partnership business. The net income of the partnership after interests capital and partner's salary and superannuation is divisible among the partners equally The partnership income and expenses for the year ending 30 June 2019 are as follows: Sales $900 000 Cost of sales Interest on capital Salary Salaries Superannuation Superannuation Other administration expenses Arun and Aruna Tarun Employees Tarun Employees All tax allowable 300 000 10 000 100 000 200 000 10 000 19 000 111 000 Required: Prepare a statement showing the computation of partnership net income for the year ending 30 June 2019. [10 Marks] Prepare a schedule showing the distribution of the net income of the partnership for the year ending 30 June 2019 to Arun, Aruna and Tarun. [Marks] What would have been the income tax consequences if Arun and Aruna each advanced additional $100,000 as loan to the partnership business on 1 July 2018 at an interest of 5% per annum. [5 Marks] Answers: LAW300 Taxation Law Semester 1 YEAR 2019 Supplementary amination page 7 of 16

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