Question
Mrs Betty Blue runs a restaurant business in Sydney as a sole trader. Her net profit from the business is around $200,000 per year. She
Mrs Betty Blue runs a restaurant business in Sydney as a sole trader. Her net profit from the business is around $200,000 per year. She has no other income. Her husband, Barry, is not working because he is a house husband who looks after the family. Betty and Barry have three children, Peter (aged 15 at school with no income), Paul (aged 17 working full-time on $30,000 per year) and Mary (aged 19 at business college with no income). From your knowledge of the taxation of different entities discuss the advantages and disadvantages (purely from a tax perspective) of Betty switching from running her business as a sole trader to each of the following different structures: (a) Partnership (5 Marks); (b) Company (5 Marks) and (c) Family Trust (5 Marks).
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