Commercial Law: Advice on Buying a College in Australia - Report

This report provides comprehensive commercial law advice for Michael and Sunny, who are planning to purchase a college in Australia. It begins by recommending a partnership business structure due to their collaborative venture, detailing the advantages of a general partnership concerning shared responsibility, liabilities, and profits. The report emphasizes the importance of a shareholder's agreement to prevent future disputes and outlines the need to comply with relevant Australian legislations, including the Partnership Act 1963 and the Australian Privacy Act 1988. It addresses taxation obligations, specifically the requirements of the Australian Taxation Office (ATO) for partnership businesses, such as registering for a TFN, filing annual partnership returns, applying for an ABN, and understanding GST liabilities. The report concludes by offering guidance on contract and employment laws to mitigate potential legal and financial issues.

Running head: COMMERCIAL LAW- AUSTRALIA
Commercial Law- Australia
Name of the Student
Name of the University
Author Note

1COMMERCIAL LAW- AUSTRALIA
To,
The Clients
Australia
Date:
Subject: Advice for the best structure to buy a College in Australia
Dear Sunny and Michael,
We have discussed in our last meeting over the concern for the appropriate legal and
commercial advice for buying a business. It is an excellent idea that you both initiated to buy
a college in Australia, which value is approx. Million dollars. However, as a startup business,
both have to understand regarding the Australian legislations as well as a basic structure that
need to be followed in the whole process. Through this letter, it will be possible to state some
advice that needs to be fulfilled in context with buying a business together.
Structure: Four basic structure is widely followed up in Australia that is Sole Trader,
Partnership, Company and Trust. As both are interested in buying and running this business
together, so there is the existence of Partnership, and it is most appropriate to follow up the
Partnership Business Structure only. Three types of partnerships are General, Limited and
Incorporated Limited Partnerships. General Partnership will be preferable in this business, as
it will allow both to be equally responsible for managing the business with equal liabilities,

2COMMERCIAL LAW- AUSTRALIA
profits and obligations (Abhayawansa and Guthrie 2014). This may affect the tax liability,
asset protection, ongoing costs and clients if any.
Agreement: It is advisable to consult the lawyer to draft a Shareholder’s Agreement. It is
essential to understand the clauses and the deals that are added in the agreement to have
transparency amongst the partners and the co-founders of the business. It will help to
eliminate any disputes, confusion and failure of the ongoing business (Regan, Smith and
Love 2017). As new owners, both have to understand regarding contract and employment
laws as well as employment dismissal agreement to avoid any future disputes in the business.
Legislations and Taxation: For running a partnership business, it is essential to follow the
Partnership Act, 1963, where the partners have to make a contract that will disclose all the
financial and legal obligations amongst them (Legislation.act.gov.au 2020). Any breach
stated within this legislation will be considered as an offence and hence will be punishable as
per the Australian criminal code.
Both have to maintain confidentiality in context with the information as per the Australian
Privacy Act, 1988. The legislation will protect the confidential information and deal
appropriately with the individual that is not connected directly with the organisation.
The business has to be responsible for the rules made by ATO. As per the Australian
Taxation Office, in a partnership business structure, the partners of the business will have to
share their income, losses and control of the business. They will have to register in TFN and
fill up an annual partnership return that will show all the business’s income and deduction
(Ato.gov.au 2020). As per ATO, the partners have to apply for an ABN that will be used in
entire business dealings. The business will also be liable to pay GST as annual GST turnover
is $75,000 or above.

3COMMERCIAL LAW- AUSTRALIA
Through this letter, it has been tried to uncover many legislations and taxation rules regarding
the partnership business structure at the initial level of buying the business. I hope these
points will help both of you in proper understanding and decision-making.
Yours truly,
Accountant
(XYZ Organization)
Australia

4COMMERCIAL LAW- AUSTRALIA
References
Abhayawansa, S. and Guthrie, J., 2014. Importance of intellectual capital information: a
study of Australian analyst reports. Australian Accounting Review, 24(1), pp.66-83.
Ato.gov.au 2020. Partnership. online Ato.gov.au. Available at:
https://www.ato.gov.au/Business/Starting-your-own-business/Before-you-get-started/
Choosing-your-business-structure/partnership/ Accessed 3 Mar. 2020.
Legislation.act.gov.au 2020. Partnership Act 1963 | Acts. online Legislation.act.gov.au.
Available at: https://www.legislation.act.gov.au/a/1963-5/ Accessed 3 Mar. 2020.
Regan, M., Smith, J. and Love, P.E., 2017. Financing of public private partnerships:
transactional evidence from Australian toll roads. Case studies on transport policy, 5(2),
pp.267-278.