Case Study 1

Jason Smith is starting his own electrical contracting business. He asks you if there is any information concerning tax rates he should consider when deciding about which structure is best for his business. In relation to companies, go to www.ato.gov.au and look up base rate entities. Why is their definition significant?

Case Study 2

Nick and Michael agree to put on a Golf Tournament. They call their business The Mick N Nick Golf Event Nick is in charge of the administration and catering arrangements while Michael undertakes duties relating to the golf. Profit/Losses are to be shared according to each separate activity. Each puts up their own capital to complete each of their tasks. The event is a success with the catering making $4,000 profit and the golf earns $3,000.

Answer the following questions:

a) Is this a partnership or joint venture?

b) How will the profits be shared?

c) Would the profits be shared differently if the catering made a loss?

d) The food suppliers have not been paid and are suing for $5,000. Who should they sue?

e) Michaels equipment worth $2,000 is stolen and he asks Nick to contribute half of the loss. Would he succeed?

Case Study 3

Todd, a financial advisor, provided expert professional advice to Miriam, (aged 59) on how to invest a large inheritance she had received to best utilise superannuation and investment property tax concessions. Having worked full time since she was I8, Miriam was looking forward to a secure retirement. When Miriam turned 62, the laws concerning tax concessions to lump sum contributions to retirement savings and the purchase of investment property changed significantly, meaning the value of her investments has fallen by 40% and that she will have to keep working past 65. Miriam is devastated.

If Miriam sues Todd for negligence, will she be successful/Why or why not?

Case Study 4

What risk management practices would you advise a client to put in place in their business to minimise the likelihood of negligence occurring? Include in your answer they type of information you would need from the client to ensure your recommendations were relevant and commercially useful.

Case Study 5

Odette is an accountant attending a convention held at the YooBute Convention Centre held by the professional association OZAccountants. On arrival Odette was presented with a welcome package containing literature and a promotional T-shirt with the OZAccountants logo printed on the front. The T-shirt had been ordered and bought from a specialist manufacturer and was in a sealed plastic bag.

Odette put the T-shirt on as soon as she arrived in her room, ready to attend the welcome function. Within 10 minutes she began to feel very ill, and a horrible, painful rash appeared on those parts of her body in contact with the material of the T-shirt. Worse, she found that she was unable to breathe. Odette was rushed to hospital where laboratory tests upon the T-shirt revealed that the material contained traces of a toxic chemical used in the manufacturing process which could not be detected by normal visual inspection.

After receiving medical treatment in hospital for a period of six weeks, the rash has reduced but there has been permanent damage to Odette's lungs. Her doctor has recommended that she work part-time for at least the next six months. Further, the week after the convention, Odette had an interview scheduled for a very senior job with the Australian Tax Office which she was unable to attend. That position has already been filled.

Considering issues of negligence only, advise Odette of any action she may take, against whom she should take it, why she may take it and any consequences of that action.