QUESTION THREE

Norman is 45 and has a successful vegan bakery in a trendy suburban shopping centre. He has three part time workers who help him out on weekends and his partner Garry who looks after the accounts. Norman's customer base is broadening because he manages the business well and his customers love his delicious savoury pastries.

Norman's income is increasing, but so is his tax. Connie, one of his regular customers, tells Norman that he would make more money if he incorporated his business. She says he would be protected by a 'corporate veil'; and that the law wouldn't be able to touch him in terms of financial liability. Connie further advises Norman that the new incorporated business could directly purchase commercial real estate in the trendy shopping strip to expand its operations. This sounds too good to be true .Please advise Norman whether Connie is correct?

QUESTION

Required.

explain to Norman whether Connie's advice is accurate. What is direct investment in real estate? Is this something that would be beneficial for Norman? Support your answer with relevant legislation and/or case law. Please ensure your advice is stated in clear and simple terms. Norman is a fantastic baker but is not a legal expert.