Business Structure Of Australia, Particularly Company And...

Introduction This report will analyse the pros and cons of various business structures in Australia, particularly company and trust. Jack and Jill are running a business, which produces income of $350,000 in 2015 and 2016. This report will highlight tax calculation under Company and Trust structure. At the end of the report there will be a recommendation of which is the most effective business structure to minimise tax payable and how to boost superannuation for better retirement. Company Div. 1 – General, Corporation Act 2001 Unlike trust, a company is a separate legal entity in Australia. Generally, a company has the same rights as a natural person and can incur debt, sue and can also be sued. In this business structure, every†¦show more content†¦Company pat its own tax liability, and individual also pay tax liability based on their marginal tax rates (franking credit may available for dividend paid by the company to the shareholders). A company pays income tax at a flat rate 28.5% from 1 July 2015 on its taxable income (only applied for company that has turnover of $2 million or less)(Australian Taxation Office, 2015) The company owns the assets of a company and it is liable for any debts incurred. This is why this type of business structure appear to be a high-risk business ventures. Generally, the assets of the owner will not accessed to wipe off any company’s loan, debts or liabilities. However, there are some exceptions applied. Financial institutions have the right to require a personal guarantee against loans or overdrafts. A personal liability could be arisen if debts are caused by recklessness, negligence or fraudulence (Australian Taxation Office, 2015). Proprietary Company (Pty Ltd.) Section 45A Corporation Act 2001 A company can be formed as private, and it is known as ‘proprietary’. This type of companies is mostly family owned and does not listed on the Australian Stock exchange (ASX). A proprietary company has less than than 50 non-employee shareholders and. A proprietary company is not permitted to offer shares or securities to the public. It is required to have at least one director and shareholder, and at the director or the shareholder has to be ordinarily reside in Australia