Finance professionals have a responsibility to provide well considered and knowledgeable advice to their clients on a daily basis.

For the following scenario, advise client on the most appropriate structure in which to run their business. The tax consequences should play a KEY part of the advice you provide. Refer to the Resident tax rates 2022-23 table from the following link: https://www.ato.gov.au/rates/individual-income-tax-rates/. Do not include the Medicare levy of 2% in your calculations.

Scenario 2

Jacky excelled in his high school studies and has worked as a casual mentor for the past two years. He is now 21 and wishes to start his own tutoring business. With the help of a friend, he has prepared a budget for this coming year and is projecting a taxable income of $50 000 for the year. He expects his income will grow by approximately 5% each year for the next 5 years. Jacky has heard of stories of his Dads conflicts with his business partners, therefore has no interest in sharing business ownership with anyone else.

1) Recommend the most feasible business structure for each client. Explain in words why you have selected this structure and outline the benefits of the structure.

2) Calculate the tax payable for each client using the business structure you selected in question 1. For partnerships, assume a 50/50 split in business ownership.

Show calculations and concluding statements for your calculations.