Companies: The Tax Framework
Applied questions establishing the company-tax foundation.
Applied Questions
Question 1 — Separate taxpayer
A shareholder owns 100% of a company and says “the company’s profit is really my income”. Explain why that statement is legally incomplete.
Question 2 — Base rate entity
A company has aggregated turnover of $20 million but 90% of its assessable income is rent and interest. Explain why turnover alone does not establish the 25% company tax rate.
Question 3 — Private expense
A company pays the managing shareholder’s private school fees and records them as “marketing”. Identify the tax issues.
Question 4 — Salary v dividend
A shareholder-director receives $150,000 salary and a $100,000 dividend. Explain why the two receipts require different company and shareholder analyses.
Question 5 — Asset sale
A company sells a long-held business property at a gain. Explain why the company cannot simply apply the individual 50% CGT discount.
Question 6 — Documentation
Explain why a dividend resolution and a loan agreement are tax-relevant legal documents rather than mere accounting paperwork.