CMA 4
George and Garry carry on a restaurant business together in partnership. The written partnership agreement states that all income of the partnership is to be distributed equally after taking into account partners’ salaries of $65 000 for George and $75
000 for Garry. The net profit of the partnership for the income tax year ended 30 June
2012 was $800 000. It has been noted that the accounting net profit figure took into account the following items as expenses:

● Salaries paid to partners of $140 000.
● Superannuation paid on behalf George $5850.
● Superannuation paid on behalf Garry $6750.
● Interest paid on commercial borrowings of $3000.

In relation to the partnership for the income tax year ended 30 June 2012, which of the following statements is most correct?

The options for this question will be randomised.
(1) The net income of the partnership in accordance with section 90 of the Income
Tax Assessment Act 1936 is $952 600.
(2) George will include $65 000 in his assessable income in accordance with section
92 of the Income Tax Assessment Act 1936.
(3) Garry will include $75 000 in hid assessable income in accordance with section
92 of the Income Tax Assessment Act 1936.
(4) The interest of $3000 is not an allowable deduction of the partnership in accordance with the case of FCT v Carberry 88 ATC 5005.
(5) The net income of the partnership in accordance with section 90 of the Income
Tax Assessment Act 1936 is $940 000.

The Jack and June partnership provides accounting services to the general public.
The gross fees of the partnership were $210 000 in the year ended 30 June 2012. The partnership employs three people and paid them $30 000 each in salary for the year and in addition paid superannuation contributions of $2250 for each of the employees
($6750 in total) into a complying superannuation fund. The partnership also