Problem: You work as an employee of Woodford Pty Limited, a registered tax agent.
You have recently acquired a new client, Leo Smith, who owns a business with income of $200,000
Leo is married to Melinda, and they have two children aged 13 and 15 years old. They own their own home and have approximately $60,000 in share investments.
Both Leo and Melinda are new to business ownership, as both have only ever been employees and are not clear on the tax considerations of operating a business through various legal entities.
Required:
1. Based on profits of the business being $200,000, Calculate the tax payable if the business is operated:
- As a sole trader
- As a partnership between husband and wife
- As a private company where salaries of $80,000 each are paid to the husband and wife and balance is taxed in the company
- As a family trust where the beneficiaries of the trust are Leo, his wife and their 2 children