Business Structure John and Fred Essay
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Under this system, "each joint venture partner would separately account for and pay tax on its income and claim the proportionate share of joint venture expenses" (Ernst & Young, no date).
Liability is also limited in the joint venture under Australian law. It is worth noting that in this case one part of the joint venture "cannot make the other joint venturer liable for debts that they incur in the name of the joint venture, unless authorized under the joint venture agreement" (Cordato Partners, 2012). Thus, John cannot undertake a cost and then ask Fred to foot part of the bill. This is something that differentiates a joint venture from a partnership, and is worth taking into consideration, depending on how the two men expect to handle the operations and financing of the venture. This
also makes joint ventures a little bit more complicated to manage than a partnership, because instead of having two people acting as one, you have two people doing their own thing for the common good. These two will need to consider which approach is more in line with their vision for the business.
ATO. (2012). Partnership tax. Australiian Tax Office. Retrieved April 22, 2013 from http://www.ato.gov.au/corporate/content.aspx?doc=/content/37484.htm&page=106
Cordato Partners. (2012). Joint ventures for real estate? Cordato Partners. Retrieved April 22, 2013 from http://www.vendorfinancelawyer.com.au/joint_ventures.htm
Ernst & Young. (no date). The Australian tax landscape. Ernst & Young. Retrieved April 22, 2013 from http://www.ey.com/Publication/vwLUAssets/The_Australian_tax_landscape/$FILE/The_Aust_tax_landscape_JBS.pdf
Net Lawman. (2013). Choosing a legal structure for your business: Partnership. Net Lawman. Retrieved April 22, 2013 from http://www.netlawman.com.au/info/partnerships-ins-and-outs-australia.php
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