Calculate Simon's taxable income for the tax year 2022–23.
The partnership’s tax adjusted trading profit for the four-month period ended 30 April 2023is £29,700.This figure is before taking account of capital allowances.(2) The only item of plant and machinery owned by the partnership is a car which cost £25,000on 1 February 2023. The car has a CO2emission rate of 125 grams per kilometre. It is used by Art, and 40% of the mileage is for private journeys.(3) Profits are shared 40% to Simon and 60% to Art. This is after paying an annual salary of £6,000 to Art.
Simon’s share of the partnership’s trading profit for the period ended 30 April 2023 is £10,960 calculated as follows:
Trading profit = 29,700
Capital allowances (25,000x 6% x 4/12 x 60%) = (300)
Salary paid to Art (6,000 x 4/12)= (2,000)
Profit share 27,400 x 40%10,960.
How come when it is then put into Simons tax computation the following calculation is done??
Simon’s trading income assessment for 2022-23 is £8,220 (10,960 x 3/4). Where does the 3/4 come from please?
Ask the Tutor ACCA TX-UK
TX-UK Specimen - FA 2022
I'm not sure I know? Where does the question come from?
I would expect profits to be adjusted for CA
Then the total is the "pot" to be divided out firstly with the proportion of the salary and then the rest of the "pot" by means of the profit sharing ratio?
it is from ACCAs website. It is a mock exam called 'TX-UK Specimen – FA 2022'. Question number 33
You need work out partnership's profit first (4 months profit ended on 30 the April 2023 - partners salary), then work out Simon's income in the tax year 3 months ended on 5 Apirl 2023).
Hope that can help.
i agree
Thank you!
no worries - all the best for your exam
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