2 Matter Plans Included
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ALERTS - Nil
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Full Commentary - Joint Ventures
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Reference materials
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AI Prompts
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Electronic Signing and Witnessing
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Looking to the Future
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101 Costs Answers
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Business Structures and the Comparative Table
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Further information
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Overview
A joint venture is a commercial relationship between two or more entities for a particular undertaking or endeavour, with a view to realising mutual commercial gain. A joint venture can be formed for a fixed or ongoing period and may be set up for a single specific purpose or an ongoing purpose. A ...
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Summary of the process
The usual steps in acting to establish a joint venture include:
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A. Getting the matter underway
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File cover sheet - Joint ventures
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To do list - Joint ventures
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First steps
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Client details and verifying identity
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Retainer instructions - Joint ventures
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Conflict of interest check
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Time and costs estimates
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GSTR 2004/2 - Goods and services tax: What is a joint venture for GST purposes
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Initial letter to client enclosing costs agreement, due diligence checklist and steps involved
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Due diligence checklist
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Enclosure - Steps involved to establish a joint venture
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Library of costs agreements
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Australian Capital Territory
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Costs agreement - ACT
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New South Wales
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Costs agreement - NSW
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Northern Territory
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Costs agreement - NT
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Queensland
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Initial letter to client enclosing costs agreement
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Costs agreement - QLD
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Abbreviated costs disclosure - Costs under $3000
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South Australia
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Costs agreement - SA
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Tasmania
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Costs agreement - TAS
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Victoria
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Costs agreement - VIC
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Western Australia
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Costs agreement - WA
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Standard costs disclosure form for clients - Fees under $3000
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If required - Updating costs disclosure
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Letter to client updating costs disclosure
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Charge securing costs
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Guarantee securing costs
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Costs disclosure before settlement in litigation matters
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Letter to client - Costs disclosure before settlement - NSW, VIC, and WA
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Letter to client - Costs disclosure before settlement - QLD, SA, TAS, ACT, and NT
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General deeds, agreements, execution clauses, and statutory declarations
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Deeds and Agreements
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Deeds
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Deed for general use
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Deed of guarantee
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Deed of release
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General deed of indemnity
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Deed of assignment of agreement
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Deed of gift
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Library of standard clauses for deeds
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Amendment
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Confidentiality for defined information - All parties
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Confidentiality for defined information - One party
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Confidentiality for terms of deed - All parties
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Confidentiality for terms of deed - One party
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Costs
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Counterparts
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Dispute resolution
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Events beyond control
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Governing law and jurisdiction
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Interpretation
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No assignment
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Notices
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Severance
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Waiver
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Whole agreement
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Agreements
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Agreement for general use
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Heads of agreement
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Non-disclosure agreement - Formal
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Non-disclosure agreement - Informal
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Library of standard clauses for agreements
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Amendment
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Confidentiality for defined information - All parties
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Confidentiality for defined information - One party
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Confidentiality for terms of agreement - All parties
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Confidentiality for terms of agreement - One party
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Costs
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Counterparts
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Dispute resolution
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Events beyond control
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Governing law and jurisdiction
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Interpretation
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No assignment
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Notices
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Severance
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Waiver
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Whole agreement
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Execution clauses
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Library of execution clauses for agreements
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Attorney
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Authorised officer
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Company
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Company - Sole director
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Individual
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Individual - No witness
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Library of execution clauses for deeds
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Attorney
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Authorised officer
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Company
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Company - Sole director
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Individual
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Statutory declarations
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Commonwealth statutory declaration
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Statutory declaration - blank - ACT
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Statutory declaration - blank - NSW
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Statutory declaration - blank - VIC
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Statutory declaration - blank - QLD
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Statutory declaration - blank - TAS
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Statutory declaration - blank - SA
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Statutory declaration - blank - WA
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Statutory declaration - blank - NT
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Standard annexure note for documents
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Standard annexure note for documents
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B. Establishing a joint venture
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Forms of joint venture
A joint venture can be:
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Advantages of joint ventures
Generally Joint ventures are an attractive vehicle for short-term or one-off enterprise projects. They offer a means for two parties to combine resources without merging or changing the ownership of their existing assets or businesses.
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Disadvantages of joint ventures
Contractual joint ventures A contractual joint venture:
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Establishing a joint venture
Participants establishing a joint venture must ensure:
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Joint venture agreement
A joint venture agreement is essential to regulating an arrangement between the participants of a joint venture and ensuring the requirements of a joint venture, as opposed to a partnership, are met. A joint venture agreement provides evidence of the partiesʼ intentions to meet those requirements.
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Joint venture agreement
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Property development joint venture agreements
Joint ventures are a common vehicle for property development projects. Joint venture property developments often involve one party providing land and a second party providing funds or services for development. These developments can be arranged in different ways. Examples of different arrangements ...
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Joint venture agreement for a property development project
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Joint venture agreement - Townhouse development project
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Incorporated joint venture
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Project management agreement
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AI Prompt for Letter to client with advice on joint venture agreement
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AI Prompt for Letter to client with advice on joint venture agreement
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Liability to third parties
Liability to a third party is governed by a contract with the third party. In a joint venture, if the contract is made with only one participant, then only that participant has direct liability to the third party. Similarly, if the joint venture vehicle is a company, the liability sits with that ...
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Tax considerations
Each participant in a joint venture should seek taxation and accounting advice.
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Powers, rights and responsibilities of joint venturers
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C. Dispute resolution
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Dispute resolution
Dispute resolution procedures should be covered in detail in the joint venture agreement for a contractual joint venture, or shareholders agreement for an incorporated joint venture. The nature of joint ventures can give rise to a perception that participants have greater freedom to act in their ...
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Litigation
If dispute resolution fails, then participants in a joint venture can proceed to litigation. Joint venture litigation is inevitably lengthy and expensive. For a contractual joint venture, it also carries the risk that the joint venture will be found to be a partnership.
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Deed of release
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D. Exiting or ending a joint venture
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Withdrawal
A joint venture participant may wish to withdraw from the venture to avoid future financial obligations. The ability to withdraw from a joint venture depends heavily on the terms of the joint venture agreement and the type of joint venture. For example, the consequences of withdrawing from a mining ...
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Selling and assignment
The joint venture agreement should include a mechanism for a participant to assign its interest to a third party. However, a participantʼs right of assignment commonly is restricted by the remaining participantsʼ rights of pre-emption.
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Asset sale agreement
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Deed of assumption
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Letter - Notice of intention to sell interest in joint venture
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Termination
As a joint venture requires more than one participant at all times, in circumstances in which only one participant remains the joint venture will automatically terminate and its affairs will need to be wound up. A joint venture does not often automatically come to an end at the expiration of a ...
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Letter - Notice of intention to terminate the joint venture
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E. Finalising the matter
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Letter to client finalising the matter
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Example invoices incorporating notification of rights
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Example invoice incorporating notification of client's rights - NSW
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Example invoice incorporating notification of client's rights - VIC
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Example invoice incorporating notification of client's rights - QLD
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Example invoice incorporating notification of client's rights - SA
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Example invoice incorporating notification of client's rights - TAS
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Example invoice incorporating notification of client's rights - ACT
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Example invoice incorporating notification of client's rights - NT
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Example invoice incorporating notification of client's rights - WA
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Closing the file
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File closing checklist
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Comments and suggestions for By Lawyers
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Business Structures and the Comparative Table
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Overview
This publication assists with:
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A. Comparative table
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Comparative table
The table below considers the following factors:
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B. The structures
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Sole proprietorship
A sole proprietorship, commonly known as a sole trader, is the simplest business structure. Its main characteristic is that the business does not have a separate legal identity from its owner. It is owned and operated by one individual who bears full responsibility for all debts and liabilities of ...
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Partnership
A partnership is a relationship between persons carrying on a business in common, with a view to making a profit. A minimum of 2 partners is required to form a partnership: s 1 of the Partnership Act 1892. The maximum number of partners allowed is 20: s 115 of the Corporations ...
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Company
Unlike partnerships and sole traders, a company is a legal entity distinct from its shareholders. There are 4 main types of companies:
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Joint venture
A joint venture is a commercial relationship between 2 or more entities for the purposes of a particular undertaking, with a view to realising mutual commercial gain. Joint ventures are usually established for a specific purpose. Unlike partnerships, joint ventures are not notional tax ...
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Trust
A trading trust is a business structure in which a trustee holds property, incurs liabilities, earns income, and distributes that income on behalf of the trust's beneficiaries. The trustee is personally liable for these activities unless otherwise agreed with the counterparty involved in the ...
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Association
Associations are typically not regarded as business structures because they primarily aim to provide protection for a committee and members of a group that usually engages in 'not for profit' activities.
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C. Comparing the structures
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Income tax
The primary way to minimise tax is by income 'splitting', which involves diverting income to the lowest tax rate entity. A sole trader and a partnership of individuals are less favourable options as they cannot split income.
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Capital gains tax
Taxable capital gains are included in the total taxable income of the entity for the income year in which the capital gains tax event occurs, and the marginal tax rate is then applied. Taxation on capital gains is more advantageous than that on ordinary income due to various concessions, including ...
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Land tax
Land tax in New South Wales Land tax is an annual tax calculated on the total value of taxable land above the land tax-free threshold. Revenue NSW provides the current rates on their Land tax page.
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Asset protection
Asset protection is the capacity of a business structure to shield its owners and operators from personal liability for debts related to the business.
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Control and succession
Most clients seek to minimise their tax liability, protect their assets, and retain full control of their affairs.
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Set-up and running costs
Set-up and ongoing running costs can be an important consideration for small and medium-sized businesses.
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Flexibility
To compare the flexibility of the structures, each is given a score from the least flexible to the most flexible. All have wide investment choices and general powers.
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D. Other considerations
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The small business concessions
Division 152 of the Income Tax Assessment Act 1997 sets out numerous small business relief concessions for capital gains tax. There is a common set of eligibility criteria. The importance of structuring asset ownership to qualify for these concessions cannot be over emphasised. With the ...
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Trust losses and family trust elections
In the event that a family trust incurs losses, then the client should obtain appropriate advice on whether or not the losses can be carried forward and whether or not a family trust election needs to be made. The complex rules involved are outside the scope of this commentary but mention is made ...
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Relationship between entities, names and trade marks
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Transfer duty
New South Wales – Landholder duty The duty on transferring shares and units was abolished in 2016. However, for companies and trusts that are land rich, duty is payable on these transactions.
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Appendix – Example sale structures from a tax perspective
Example 1 – Tax advantages of a vendor selling shares Tax advantages of a vendor selling shares in the company rather than the company selling the business.
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