Questions to be answered
1. One way in which the power of the Commonwealth parliament has grown is by the referral of State law-making power. Describe an example where such a referral has been beneficial to business.
2. Does a decision made at an earlier time in any court in Australia always have to be followed by a court in Australia hearing a case with similar facts at a later time? Explain your answer.
3. What are the uniform matters which are set out in the Civil Liability Acts in regard to establishing standard of care in a particular situation?
4. Jayne is an accountant and business advisor. Christopher and Fleur run a highly profitable business and sought advice from Jayne as to the best business structure and practices to legally minimize their rising tax obligations. Jayne did so and advised Christopher and Fleur to set up a particular kind of Trust. Two years later, following a change in government, the tax laws concerning trust were changed significantly. Christopher and Fleur are now obligated to pay 25% more tax than they would have been under a company structure. They are angry and believe Jayne as acted negligently. If they were to sue Jayne for negligence, would they be successful? Why or why not?
5. What risk management practices should a tax practitioner/adviser or accountant adopt to minimize the likelihood of negligence occurring?
6. What kind of matters should be considered when deciding on an appropriate business structure?
7. Raymond, Debra and Robert are partners in a firm which provides accounting and business management services to small and medium businesses. Marie owns and operates a communications business which she wishes to franchise and she contacts Raymond to become a client of the firm. Raymond does not share Marie’s business with Debra & Robert. Instead, Raymond suggests to Marie, that he, Raymond act separately and privately for Marie as he has a ‘broader global vision’ than the firm. Marie agrees and as her business grows, Raymond makes a significant profit. Eighteen months later, Debra and Robert discover that Raymond is working for Marie and demand that they share in Raymond’s earnings from Marie. Raymond refuses. Discuss the issues raised by Raymond’s behaviour. Will Debra and Robert be successful in their claim? What effect may Raymond’s behaviour have on the partnership? Give reasons for your answers.
8. Describe the way in which promoters may protect themselves form personal liability.
9. Ruprecht and Lawrence are partners in Trident Holdings, a business which manufactures synthetic cork products. The business is growing and Ruprecht and Lawrence are keen to obtain further capital, export their products and also reward ten loyal long term employees who have been with them since they started the business. They decide to change their business structure to proprietary limited company and request your advice as to the following matters
-What is the purpose of the Small Business Guide produced by ASIC?
-In what way can a proprietary limited company structure be used to reward employees?
-What is the maximum number of shareholders allowed for a proprietary limited company?
-Can the business continue to be called Trident Holdings? If not, what changes must be made?
-What is the difference between a small proprietary company and a large proprietary company?
-How may Ruprecht and Lawrence use the structure of the proprietary limited company to raise capital to grow the business
-Why is the company structure beneficial for a business involved in export?