Fringe Benefit Tax and Income Tax Assessment Act

Answer 1:
The Section 4-15 of the Income Tax Assessment Act, 1997 lays down the way in which taxable
income is to be calculated for the income year (1st of July to 30th June), as per this section taxable
income = Assessable income – Deductions, Assessable income is as explained in division 6 and
the deductions allowable in division 8 where division 35 prevents losses from non-commercial
business activities that may contribute to a tax loss from being offset against assessable income.
Since the applicability of any special provision does not apply in the present case the income of
the partnership shall be calculated as per section 4-15.
Other applicable divisions and sections like Division 70 – Trading Stock and other information
that is inter alia useful for assessing the income of the partnership is considered further
(Ato.gov.au,2019).
Working papers to assess the taxable income for Brekkie and Lunch and Oz bottle shop:
Calculation of Credit Sales Amount ($)
Debtor balance as on 1st July 2016 3,925.00
Cash Received from debtors 32,800.00
Debtor balance as on 30th June 2017 3,010.00
Credit Sales 31,885.00
Cost of Goods Sold during the year
Cash Paid to creditors 128,678.00
Goods taken away by partners 3,200.00
Opening Balance 6,500.00

Closing Balance 7,010.00
Cost of Goods 125,988.00
Depreciation on assets as calculated by using depreciation calculator given by ATO
(ATO,2016) : 806.20
Assumed that:
 Air condition installation is repair expenditure as there is no asset namely air conditioner,
thus charged to profit and loss account;
 $3,200 of stock taken from the bottle shop is at purchase price;
 Loan is entirely for the business and none of it is used for personal purposes;
 Union fees is completely a business expenditure;
 Bank accounting charges of ANZ bank are completely relatable to the business;
 5600 taken by partners is added to income as this is not allowable as expenditure.
Considering all the information and data given above the net income for partnership for the year
ended 30th June 2017 is 45,068. Also, considering the facts given in the question relating to joint
utilization of business premises and other expenses division 35 of the Income Tax Act,1997 have
been regarded while attributing the joint expenses to the ascertain the net taxable income of the
firm; apportioning only the portions of expenses used to facilitate the business operations;

Computation for the taxable income is as follows:
Particulars Income Expenditure
Sales
Cash 150,170.00
Credit 31,885.00
Air Conditioner Installation 1,200.00
Shop Painting 150.00
Cash Taken by Partners 5,600.00
Cost of Goods Sold 125,988.00
Car Expense (90% for van and 60% SUV) 2,364.00
Mobile Bill (90% allocable to business) 633.6
Electricity bills (80% used for business) 1,176.00
Council Rates (60% allocated) 310.2
Insurance (Completely for business) 1,250.00
Union Fees 284
Account Charges 595
Interest Expense 5,500.00
Repair Expenses 1,350.00
Depreciation 806.20
Loss on sale of asset 980
Total 187,655.00 142,587.00
Net taxable Income as per section 4-15 (total of assessable income less the total deductible
expenses) is: 187,655.00 - 142,587 = 45,068.00