FNSACC601 & FNSACC603: Tax Calculations, Trust & Partnership Income

This assignment provides solutions to various taxation questions covering individual income tax calculations, trust income distributions, and partnership income allocations. It addresses scenarios involving prescribed persons, inter vivos trusts, and partnership agreements. The assignment includes calculations for assessable income, tax payable by trustees and individuals, and reconciliation of taxable income for companies. Additionally, it covers franking account preparation, average income calculations for primary producers, and assessable contributions to superannuation funds. The document also touches on income attributable to club members. Desklib offers this assignment as a study resource, providing students with access to solved assignments and past papers to aid their learning.

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 1:
Q1.1.9.
(Comprehensive calculation for a prescribed person)
Ron Veldhuis is aged 16 and is currently studying full-time at high school whilstlivingwith his parents.
During the 2016/17 tax year, Ron received the followingamounts: $
Gross Wages from part-time job (PAYG tax withheld$800) 4,700
Gross Interest received on fund given by his parents (TFNwithheld $4,900) 10,000
Income Distribution from Estate of LateAunt 7,500
Income Distribution from Family Trust (tax paid by Trustee$1,500) 6,000
Unfranked Dividend from shares in QQQ Ltd (these were bought with funds from previous
Family Trust distributions) 1,200
Required:
(a) For the purposes of Div 6AA, how much excepted assessable income has Ron derived?
Gross wages from part time- 4700
Income distribution from Estate of late aunt- 7500
Income distribution from Family trust- 6000
Unfranked dividend from family trust- 1200
Total $19400
(b) For the purposes of Div 6AA, how much eligible assessable income has Ronderived?
Eligible assessable income
Income from Family trust- 6000
Unfranked dividend from shares in QQQLtd- 1200
Total $7200
(c) Calculate net tax payable by Ron for the 2016/17 taxyear.
Tax on Excepted income
($19400-$18200(tax free threshold))*19%
= $228
Tax on other income
$7200*45%
=$3240
The following questions are based on the material in Chapter 2:

Units Covered: FNSACC601 & FNSACC603
Q2.2.15
(Comprehensive, inter vivostrust)
The Alberts Family Trust, an inter vivos trust, had the followingbeneficiaries:
Candy (aged 45; entitled to 40% of trustincome)
Dandy (aged 30; bankrupt; entitled to 35% of trustincome)
Landy (aged 17; entitled to 20% of trustincome)
The remainder of each year's income was to be retained or distributed at the Trustee'sdiscretion.
During the 2016/17 tax year trust income was $195,000.
A discretionary amountof$7,000 was paid to Landy (this amount was in addition to Landy’s entitlement under
the TrustDeed).
The trust also had losses of $15,000 in the 2015/16 tax year. These were to be met out of the trustincome.
Landy also received interest of $38,000 during the 2016/17 tax year from investments given to him by
hisparents.
Landy is single and is not covered by private healthinsurance.
Required:
a. Complete the following table (covering all beneficiaries)nominating:
 Name of theBENEFICIARY
 Whether or not the beneficiary is PRESENTLYENTITLED
 Whether or not the beneficiary is under a LEGALDISABILITY
 WHO IS ASSESSED on eachamount
 Which sections of the Act apply to make the incomeassessable
 The amount retained ordistributed.
Beneficiary Presently
entitled?
(Yes/No)
Legal
disability?
(Yes/No)
Who is assessed?
(Beneficiary or
Trustee)
Section(s)
Applicable
Amount $
Candy No No Trustee Section 97 72000
Dandy No Yes Beneficiary Section 97 63000
Landy No Yes Beneficiary Section 97 43000
Balance
Total $178000
b. Calculate tax payable by the trustee on behalf of Dandy, Landy and the balance of trust net income.

Units Covered: FNSACC601 & FNSACC603
Tax payable by Trustee on behalf of Dandy:
Assessable income*45%
72000*45%= $32400
Tax payable by Trustee on behalf of Landy:
Assessable income
Income from trust- 43000
Total assessable income- $43000
Assessable income*45%
= $43000*45%
= $19350
Tax payable by Trustee on balance of trust net income:
Assessable income
Balance of trust income- 2000
Assessable income*45%
= $2000*45%
= $900
c. Calculate tax payable byLandy (only).
Assessable income
Income from trust- 43000
Income from investments- 38000
Total assessable income- $81000
Assessable income*45%
= $81000*45%
= $36450
The following questions are based on the material in Chapter 3:

Units Covered: FNSACC601 & FNSACC603
Q3.3.3
(Allocation of Partnership Net Income)
Sue, Prue, Lou and Emmet operate a transport company in the ratio 4:3:2:1.
Their assessable income for the 2016/17 tax year amounted to $780,000 while they had $300,000 of
deductions.
Their partnership agreement states that all profits and losses are to be shared in the ratio 4:3:2:1 after
adjusting for partner’s salaries, travel allowances and interest on capital.
The following data was extracted from their financial records:
Interest on Capital
Sue $ 12,000
Prue 15,000
Lou 5,000
Emmet 3,000
Partner’s Salaries
Sue 65,000
Prue 50,000
Emmet 20,000
Travel Allowances
Sue 4,000
Emmet 6,000
Required:
Based on the above information, complete the table calculating each partner’s share of partnership net
income under the terms of the partnership agreement.
Sue Prue Lou Emmet Total $
Interest on capital 12000 15000 5000 3000 35000
Partners’ salaries 65000 50000 20000 135000
Travel allowances 4000 6000 10000
Share of Adjusted Net Income 109091 81819 54545 27273 300000
Total $ 190091 146819 104545 83273 480000

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 4:
Q4.4.21
(Reconciliation of taxableincome)
Trash Converters Limited, a small business entity, has prepared an income statement for2016/17:
$ $
GROSSPROFIT 1,624,000
Add: OTHERINCOME
UnfrankedDividend 2,300
Fully Franked Dividends (company tax rate 30%) 7,700
Net Dividends from Spain - note1 32,000
Gain on Sale of Shares - note2 2,000 44,000
TOTAL OPERATING INCOME 1,668,000
EXPENSES
Depreciation - note 3 34,000
Fringe BenefitsTax 48,000
Payroll Tax 46,900
Superannuation - note4 75,000
PAYG Instalments Paid - note5 92,000
Other DeductibleExpenditure 965,000 1,260,900
NETPROFIT 407,100
Note 1 The dividends from Spain have had $8,000 of tax withheld.
Note 2 Shares sold during the year were acquired in 1984 as an investment.
Note 3 Decline in value deduction is calculated as $28,000.
Note 4 Superannuation includes an amount of $30,000 paid to a director's spouse. This
$30,000 amount is deemed to be excessive.
Note 5 All of the PAYG tax instalments relate to the current year.
Required:
a. Complete the table reconciling net profit with taxable income for the 2016/17 taxyear.
b. Calculate net tax payable by the company for the 2016/17 taxyear. (For the purpose of this exercise,
assume a 27.5% small business entity company income tax rate, as per chapter 4.3 of your textbook).

Units Covered: FNSACC601 & FNSACC603
4 a. and 4 b.
$ $
Net Profit per income statement $407100
Add:
Franking Credits $3300
Foreign Tax – Spain $8000
Accounting Depreciation $34000
Superannuation $45000
PAYG instalments $92000 $182300
$224800
Less:
Decline in Value $28000
Accounting Gain on Shares $2000 $30000
Taxable Income $194800
Tax on Taxable Income 53570 $53570
Less:
Franking Tax Offset $2310
PAYG Instalments $17000
Foreign Income Tax Offset – tax paid $8000 $27310
Tax Payable 26260 $26260
References
https://www.ato.gov.au/Print-publications/Guide-to-capital-gains-tax-
2012-13/?page=8

Units Covered: FNSACC601 & FNSACC603
Q5.4.27
(FrankingAccount)
Rudimentary Pty Ltd, a corporate tax entity, has the following transactions for the 2016/17 taxyear:
Date Transaction $
30/06/16 Balance Nil
15/10/16 PAYG InstalmentPaid 14,000
15/12/16 2015/16 Tax RefundReceived 9,500
12/03/17 Fully Franked DividendReceived 3,500
08/05/17 Fully Franked DividendPaid 7,000
Note – the benchmark franking percentage is100%.
Required: Prepare the franking account for the 2016/17 taxyear.
Date Transaction Debit Credit Balance
(state if DR or CR)
1/7/16 Opening Balance 0
15/10/16 PAYG Instalment paid 14000 14000
15/12/16 2015/16 Tax refund 9500 4500
12/03/17 Full franked dividend received 3500 8000
08/05/17 Fully Franked dividend paid 7000 1000
Reference
https://www.ato.gov.au/Business/Imputation/Paying-dividends-and-
other-distributions/Franking-account/

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 5:
Q6.5.1
(AverageIncome)
Ernie Wombat is a primary producer who commenced business in 2011/12. The following data relates to
Ernie’s first 6 years oftrading:
Year AssessableIncome Deductions
2011/12 $32,000 $15,000
2012/13 35,000 20,000
2013/14 31,000 39,000
2014/15 42,000 21,000
2015/16 45,000 22,000
2016/17 51,000 25,000
 All assessable income and deductions are from primaryproduction.
 The deductions do not include any amounts that may be deductible for losses of previousyears.
Required:
a. Calculate Ernie’s taxable income for each taxyear.
b. Calculate Ernie’s average income for each taxyear.
Year Taxable Income Average Income Notes (if any)
2011/12 17000 8500
2012/13 15000 16000
2013/14 -8000 3500
2014/15 21000 10500
2015/16 23000 22000
2016/17 26000 24500

Units Covered: FNSACC601 & FNSACC603
Q7.5.5.
(Tax calculation under averaging)
Rikki Teabridge had the following income during the 2016/17 taxyear:
Net Business Income from Primary Production $ 35,000
Gross Wages from part-time job at local supermarket $20,000
 Rikki’s average income was$20,000.
 Rikki had no other assessable income ordeductions.
 PAYG tax of $2,000 was withheld from Rikki’swages.
 Rikki is covered by adequate private healthinsurance.
Required:
Complete the following statement showing Rikki’s tax payable for the 2016/17 taxyearincluding any
averagingadjustment.
Notes/Workings (if any)
Tax on Average Income
Tax on $ 20000*19% $3800
Comparison of Tax Rate 30%
Gross Averaging Amount
Tax on $ @ ordinary rates 55000*32.5% $17875
Tax on $ @ comparison rates 55000*30% $16500
$17187.5
Averaging Component $17187.5
Averaging Adjustment Tax Offset $2000
Tax Payable Calculation
Tax on $ $21675
Less Averaging Tax Offset $28
Less Low Income Tax Offset $1375
Add Medicare Levy $358
Less PAYG Withheld $2000
= Tax Payable $17914
Q8.5.9

Units Covered: FNSACC601 & FNSACC603
(Trading account, average cost)
Clyde Wishbone breeds and sells sheep. During the 2016/17 year records disclosed the following:
Quantity Value ($)
Sheep on Hand – 30 June2016 8,200 47,900
Purchases 500 9,200
NaturalIncrease 2,900
Sales 4,300 92,400
Rations 100
Deaths 300
Clyde chooses to use the prescribed value for natural increase and average cost for rations and closingstock.
Required:
Prepare the average cost calculations and the trading account for the 2016/17 taxyear.
Average Cost Calculations
Qty. of Sheep $
Opening Stock 8200 $47900
Purchases 500 $9200
Natural Increase @ prescribed value 2900 $2895
Total 11600 $59995
Average Cost of one sheep $5.17
Average Costof Rations Qty Sheep for rations 100 $5.17
Average Cost of Closing Stock Qty Sheep at Closing Stock $21.48
Sheep Trading Account
Qty. $ Qty. $
Opening Stock 8200 47900 Sales 4300 92400
Purchases 500 9200 Rations 100 517
Natural Increase 2900 2895 Deaths 300 1551
Gross Profit 182685 Closing Stock 6900 148212
Total Total 242680
The following questions are based on the material in Chapter 6:
Q9.6.3.
(Assessablecontributions)

Units Covered: FNSACC601 & FNSACC603
The Spotless Superannuation Fund is a complying superannuation fund. The fund received the following
contributions:
July 2016 Contributions from contributing employer relatingto2015/16 $27,800
Sep2016 Superannuation Guarantee Shortfall received from ATO 11,400
Oct2016 Contributions from employer relating to Sept 2016 quarter 34,500
Jan2017 Contributions from employer relating to Dec 2016 quarter 36,100
Apr 2017 Contributions from employer relating to March 2017 quarter 27,450
July 2017 Contributions from employer relating to June 2017 quarter 19,320
All of the above amounts related to members who have supplied their TFN.
There was a further $8,340 of superannuation accrued and payable by the contributing employer in relation
to 2016/17 but not yet received by the fund.
Required:
Calculate the fund’s assessable income from contributions for the2016/17 taxyear.
Contributions from contributing employer relatingto2015/16- 27800
Superannuation Guarantee Shortfall received from ATO- 11400
Contributions from employer relating to Sept 2016 quarter-34500
Contributions from employer relating to Dec 2016 quarter-36100
Contributions from employer relating to March 2017 quarter-27450
Contributions from employer relating to June 2017 quarter-19320
Total 156570
Less: accrued 8340
= 148230
Q10.6.5
(Assessable income, ordinaryincome)
The Blowhard Superannuation Fund, a complying fund, received the following amounts during the 2016/17 tax
year:
Unfranked Dividends from listed companies $12,450

Units Covered: FNSACC601 & FNSACC603
Franked Dividends from listed companies (Fullyfranked. Company Tax rate 30%) 20,300
Interest from cash managementaccount 8,250
Proceeds from redemption of term deposits (includes principalof$50,000) 59,400
Interest from at-call deposit (net of $4,900 TFN taxwithheld) 5,100
Interest from investments segregated to meet the payment of current income
stream benefits
35,000
Required:
Calculate the fund’s assessable income from investments for the2016/17 taxyear.
Unfranked Dividends from listed companies-12450
Franked Dividends from listed companies-20300
Interest from cash managementaccount-8250
Proceeds from redemption of term deposits-59400
Interest from at-call deposit-5100
Interest from investments-35000
Total= 140500
The following questions are based on the material in Chapter 7:
Q11.7.3
(Calculation of income attributable to members)
Dockside Rowers Club disclosed the following data for the 2016/17 financialyear:
DaysOpen 361
Financialmembers 900