3.9 Another relatively widespread business
structure is a trust. What are the two main forms of trusts in Australia? What
are the tax issues associated with family trusts?
A trust is a common form of business test bank structure
in Australia and represents an obligation on a person to hold property for the
benefits of others. Family trusts and discretionary trusts are established for
the benefits of families and unit trusts are established for the benefits of
various external parties. Family trusts have various benefits including income
splitting, asset protection and the transfer of assets between generations
(before the death of the owner of the assets) without incurring tax.
3.10 Illustrate with an example how sole traders and partners are
taxed in Australia. How does this compare to Australian test bank company tax?
The sole trader and partnership form of
business do not pay separate income tax; each individual owner must report
business income or losses on his or her individual income tax return. Tom,
Cerise and Livia (partners) would submit their own individual tax returns
including their respective shares of the partnership profit. However, companies
such as JB Hi-Fi Ltd and Qantas Group do pay separate income tax. The current
rate is 30 per cent also available for test bank.
3.11 What does the term ‘mutual agency’ refer to in the context of partnerships? Provide
an example where 'mutual agency' could be textbook solutions both an advantage and disadvantage
for a partnership.
Mutual agency refers to the right that each
partner has in a partnership, where each partner is seen as an agent for the
entity and has a right to enter into contracts for the entity which bind the
other partners. An example of where this would be an advantage is that each
partner can operate as an agent so there can be an allocation of tasks and more
than one partner can make decisions so the decision making can be spread over
several different partners of textbook solutions. An example where this would be a disadvantage is if
Cerise a partner in the partnership of "Tom, Cerise and Livia"
decides to enter into a contract with a friend "Martha" who is in a
related industry. This would mean that Martha's business would become the main
supplier of goods to the partnership. Unknown to the partnership, Martha's
business is currently in a financial crisis and is unlikely to honour the
arrangement of providing goods to the partnership. Cerise was acting as an
agent for the partnership and had a right to enter into a contract with Martha
on behalf of the other partners. The contract is binding and if Martha cannot
provide the goods, then the partnership must face the consequences of Cerise's
actions.
3.12 Go to the Australian
Taxation Office website at www.ato.gov.au and define each of the following:
a. PAYG
The PAYG system of tax is a single, integrated system for reporting and
withholding tax due to the ATO by employees of your entity, some contractors,
and amounts withheld from payments to businesses who don’t quote their ABN. All
amounts withheld must be forwarded to the tax departments textbook solutions is available.
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