QUESTION 3 - Partnerships (20 Marks) Peter and Samantha are a married couple who live in Parramatta

QUESTION 3 - Partnerships (20 Marks) Peter and Samantha are a married couple who live in Parramatta. They jointly own an apartment block in Paddington which they rent out. The block contains 6 units. Peter works part-time as a gym instructor in Fairfield and earns $30,000 a year with PAYG withheld of $5,000. However, he also devotes on average about 20 hours a week to attend to repairs and maintenance on the apartments, maintaining the grounds and garden, chasing up overdue rents and finding new tenants. Samantha looks after their 3 young children and keeps accounts, including paying invoices and preparing tax returns for herself, Peter and the partnership. The partnership accounts for the year ended 30 June 2021 are as follows: Receipts $ Rent collected 240,000 Fully franked dividends from TMZ Bank (an Australian resident financial institution) 7,000 Payments $ Repairs to units 35,000 Interest on mortgage in relation to units 60,000 Travel by Peter from home to Paddington 2,000 Travel from Peter's work to Paddington 3,000 New Computer purchase to keep tax records and accounts (Purchased 1/10/20 - 7,000 effective life of 5 years) Speeding fine incurred by Peter 330 Salary paid to Samantha 20,000

Peter and Samantha agree to split - pro?ts 10% (Peter): 90% (Samantha) and - losses 30% (Peter): 20% (Samantha). With reference to legislation. caselaw and any relevant tax mlings: i. Explain by reference to general principles. caselaw and tax rulings (if any) whether the Commissioner will accept the pro?t distribution agreed between Peter and Samantha. {3 marks) ii. Calculate the net income of the partnership. (7 Marks} iii. Based on your answer to (i) above, calculate the tax payable by Peter for the year ended 30 June 2021. {5 Marks) iv. Based on your answer to (i) above, calculate the tax payable by Samantha for the year ended 30 June 2021. (5 Marks) Assume Samantha earnt no other income throughout the relevant period. NOTE: Your answer must be supported by reference to relevant legislation, case law and mlings. if any)