Case Study of Vw's Diversity Strategy

Executive Summary

This paper focuses on a small business offering courier service in Australia. This report will provide some advisory suggestion for the small business operated in Australia by Buzz and Fuzz. When it comes to the taxes and deductions the courier business has to pay special attention to, the author will present the qualifications the business should have. The author will also discuss the derivation methods that are a must for the success of the business. As a particular personal service entity (PSE), it is important for the brothers’ small courier business to follow the related regulations and rules. The potential deductions the small business can achieve will be analyzed to provide suggestions for the brothers to maximize the deductions of the small business based on the instructions of the tax legislation in Australia. The tax legislations in Australia and related journals will be referred to provide reliable advices to help the small business to achieve possible deductions.

Table of Content

Executive Summary        

1.0 Introduction        

2.0 A small business and advantages        

3.0 Derivation method        

4.0 Evaluation and suggestions to maximize possible deductions        

5.0 Conclusion        7

6.0 Reference        

1.0 Introduction

The two brothers, Buzz and Fuzz, are operating the small courier service in Australia. They own the properties of the business together. What this business provides is to deliver and pick up goods for customers. It is a fact that this business is suffering high level of expense and all the facilities they have can not be as effective and efficient as before. Even though this small business has helped the two brothers to get considerable profits, they still need some accounting proposals and tax concessions to promote continual growth. The author tries to explain what a qualify business should be in the first part of this paper. The advantages for this small business to get the possible deductions will be analyzed to increase confidence. Which type of derivation method should the small business use to make reasonable accounting reduce the taxes will be discussed based on the application of tax legislation in Australia. Which method will be the best choice for the small business will be selected to help the small business to maximize possible deductions. The suggestions will be provided finally to reach a proper conclusion.  

2.0 A small business and advantages

The definitions of a small business refers to a business independently owned and operated to achieve profits for one or small groups. This kind of business owns a small amount of property and can only achieve a comparatively small amount of profit due to its limited production capacity. If such a small business is operated at high cost, the business will suffer many disadvantages to achieve continual growth. Some accountants thought that for such a small business especially for a small service business, the accounting by taking the tax the business has to pay is essential for the business to get the possible deductions. According to the tax legislation term in Australia, a small business in this country should have no more than two million dollars turn over in one year. This is the basic standard to evaluate a qualified small business. According to legislation on business operation in Australia, a small business has freedom in the form of business and there three kinds of businessmen can be qualified as small business: sole traders, partnerships and companies (Barro, 1991). As the mentioned standards indicate, the business conditions of the small business operated by the brothers are consistent with these standards. Last year, the brothers had got one million dollars turnover, which is obedience to the two million dollars required by the tax legislation in Australia. It can be concluded from the mentioned analysis the small business can be partnership, in which all the business activities are held for the sake of all the partners to achieve most benefits and profits for partners. Also based on the common law in Australia, all the partners in the small business jointly own the property, assets and profits according to the related contract or agreement. In the small business which should be recognized as a whole business entity, a bank account is necessary for all the partners to own and manage the business effectively. Considering the business operated by Buzz and Fuzz, the two bothers own the property jointly. The office equipment, three vehicles and the facilities used to manage the business are the joint possessions the partners have. It indicates that the brothers work for the benefits of all the partners rather than that of individuals. In this way the small business is qualified in Australia.  

The concessions in tax are a privilege particularly provided for small business provided by Australia government. The government in Australia tends to believed that small business play a critical role in promoting national economic growth when a country suffers during the financial crisis. So it has offered a variety of concessions in tax for the small business in Australia (Abdel, Rowena & Robyn, 2010). According to the accounting policies and tax legislation in Australia, the small businesses can account for the trading store and income and can depreciate assets. Since 2001, the income tax for small businesses has been reduced from 36 to 30. The Australian Federal Government has decreased the payroll taxes according to related statements. Some small businesses are even released from payroll taxes. For small business operated in the village or other remote areas, they have more concessions than the business in cities due to the limited recourses, consumers and business environment. In Australia, benefits fringe tax is the tax should be paid according to the non-cash benefits sent to employees by companies. According to the tax legislation, the government has tried to reduce or even remove the additional benefits fringe tax which all the companies usually have to pay at a rate of 48.5 percent (Bernadette, Christian & Erich, 2012). These advantages enjoyed by Australian small business contributed a lot to the reduction of the total cost. A referential tax policy has been developed to help to reduce and save financial loss for small businesses in Australia. This will also helps to reduce the coast on equipment and utilities. General deductions in Tax as well as the concessions in tax together enable the small business to be capable of surviving especially during the period the national economy suffers difficulties. It implies that these advantages small businesses have in Australia can not only help these businesses to reduce the total cost but also bring more benefits for both the business and employees.