3) Regarding Business structure Dan Murphy is considering a change of his business structure from the...
3) Regarding Business structure
Dan Murphy is considering a change of his business structure from the sole trader to another structure commencing on the 1st of July 2019 (starting from a new financial year). He has provided you with the following financial and other family details.
Dan is earning $150,000 (net of deductions) per annum from his engineering business.
Judith earns $10,000 (net of deductions) from her teaching job.
They have the following family members living with them.
Robert Murphy: Dan’s father who is 70 years old. He has retired from his job as chief executive officer of Suncorp Ltd on the 15th of July 2019 (gross income was $2,000) and has not been earning any income since retirement. Judith takes care of him as his health has deteriorated recently.
Jean Murphy: 19-year-old son. He is a full time university student, currently no income.
Xavier Murphy: 15-year-old son, full time high school student
Megan Murphy: 2-year-old daughter.
Dan is considering the following options.
Remaining Sole trader stucture
Partnership with Judith in equal profit sharing ratio
Australian registered private company
Discretionary Family Trust
Required : Please advise which business structure would you recommend in order to minimise tax on the client’s income. Comment on the tax implications of each business option considered. Show tax working/ all the tax calculation for each option.