ABC Pty Ltd and DEF Pty Ltd have agreed to join together and develop a gold mine. Both companies have contributed different equipment and have agreed that each company will keep 50% of the gold extracted from the gold mine. Each company will pay its own expenses and will each sell the gold extracted separately. For tax purposes this arrangement is more likely to be:

Question

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This arrangement is more likely to be a joint venture because both companies have agreed to collaborate on a specific project (developing a gold mine), with each contributing different resources and agreeing to share the output (gold) equally, while also bearing their own expenses and selling their share of the gold separately. This setup aligns with the typical structure of a joint venture, where parties come together for a specific business undertaking, sharing profits, risks, and losses according to their agreement, without necessarily forming a new legal entity.

ABC Pty Ltd and DEF Pty Ltd Have Agreed to Join