Question

Mary has been offered a retirement package from her work as a flight attendant with Qantas. Her long-term goal has been to buy a day-spa resort on the central coast of New South Wales with her sister Martha, who is a marketing consultant. Mary and Martha do up a business plan. They find an old yet suitable building at Nelson Bay which is on the market for sale. With their husbands (John who is a builder and James who is a plumber) they decide to sell their homes in the Sydney CBD for a fortune and purchase the building to start their day-spa. They think the potential for the business venture is enormous, but expect that additional capital will be required over the next five years for their dreams to be realised.

Question:

Go to http://business.gov.au. Click on and read details of ‘Starting a business guide’ and ‘Make Key Decisions’ and then select ‘Decide on a business structure’. Compare and contrast the income tax issues associated with the partnership and company forms of business structure.

Answer 1

Particulars	Partnership	Company
EASE	Relatively Easy	Complicated Process, Documentation required
Liability of Paying Tax	Partnership didi not have liability to pay tax, Partner himself have to pay tax on their respective share of income	Company is a seperate legal entity hence liability to pay tax is on Company
Return filing Requirement	Require a partnership tax return to be lodged with the Australian Taxation Office (ATO) each year	Requires an annual company tax return to be lodged with the ATO
Opinion	Better for both sisters since hasle free business and personal reate of tax which is low is applicable	More tedious process require more return filing tax is on higher side