Kaur, Ramandeep and Alley, Clinton (2016) Accounting. Applied Management Conference, Wintec, Hamilton, New Zealand, 27 May 2016.

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Abstract or Summary

Two different businesses in the different New Zealand registered companies. They both are shareholders and directors of the companies. They are both actively involved in the business. B Singh is also working as an employee under some other employer and at present is also working as an independent contractor. They both own their residential house in Trust and have rental property in the partnership. They also have investments in shares and bonds from where they get dividend and interest. At present the client is keeping some profits in the company and distributing other part as shareholder salaries. Investments are under partnership and sharing income equally whereas only B Singh is working as an independent contractor and as an employee and this income is treated under his personal tax return (IR3). Based on current situation, their Residual Income Tax liability in total is $14947 and they needed to pay $20500 as Provisional tax (annexure 3-7). The client’s aim is to restructure his business activities and investments to minimize personal liabilities, Safeguard assets, minimize tax implications and easy succession. For this, there are five possible situations that could fulfill client’s requirement such as: Case1. Company not keeping profits rather distributing all as Shareholders Salaries equally Case2. Companies not distributing any profits to shareholders rather keeping in company Case3. If all other business activities are put under company Case4. If all business activities are put under Partnership Case5. If all business activities put under Trust and profit not distributed to beneficiaries. After analyzing data under above situations, it is found that the case1 is more beneficial to the client as he need to pay less tax liability i.e. $13913 as compared to other options. Although tax liability under case 4 is minimum $13661 but that is the case where everything needs to be kept under partnership and client wants to minimize his personal liability. So we recommend him to keep business in the company which again fulfill his aim of easy succession because it is easy to transfer shares from one person to another. It is also an advice for him to keep his personal residence under Trust and make those as beneficiaries whom he wants. We also recommend him to have ‘Prenuptial agreement’ before his son’s marriage. All these recommendations are based on current financial data. The client was well satisfied with this research and recommendations.

Item Type:Paper presented at a conference, workshop or other event, and published in the proceedings
Keywords that describe the item:Accounting, business, shareholders, directors
Subjects:H Social Sciences > HF Commerce
Divisions:Schools > Centre for Business, Information Technology and Enterprise > School of Business and Adminstration
ID Code:5915
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Deposited On:26 Mar 2018 05:12
Last Modified:26 Mar 2018 05:12

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