Question 1 (25 Marks)
New partnership is created on 31/3/2021 per FCT v Happ Partnership profits are determined when a partnership dissolves. Therefore $266,000 net income to 31/3/2021 related to the partnership of Evans and Downing and $90,000 net income relates to the new partnership of Evans, Downing and Smith
Therefore assuming income is shared equally after a per annum salary of $80,000, under the partnership agreement, then each partner would be allocated the following share of net income on which they would be assessed.
Question 2 (25 marks)
As Minnie is under 18 years of age she is suffering a legal disability and accordingly S98(1) applies so that the trustee would be required to deduct and remit the tax on her share of net income ($50,000) and then Minnie must include that income in her own tax return claiming a credit for the tax already paid by the trustee. The tax payable on Minnie’s share of net income would not be subject to Div6AA rates as Minnie is an excepted person because she is a minor who is working full time.
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