How to reduce tax bill

Discussion in 'Wealth Creation & Management' started by billybob888, Mar 28, 2015.

  1. AngloSaxon

    AngloSaxon Active Member

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    Yes I know. It's embarrassing. I've passed the speech on what is money but got stuck shortly afterwards.
     
  2. SilverDJ

    SilverDJ Well-Known Member

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    The damn good ones will tell you that pretty much the only way to pay less tax is to earn less.
    The dodgy ones will tell you anything you want to hear, and given that we have a self assessment tax system in Australia, you can reduce your tax as much as you like, until you get caught.
     
  3. SilverDJ

    SilverDJ Well-Known Member

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    A good accountant will tell you that can have downsides.
    Once you are "on the grid" as working from home, if you go sell that home, which is normally tax free, a percentage of it will magically attract capital gains tax.
     
  4. SilverDJ

    SilverDJ Well-Known Member

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    Works until you get audited, then good luck with that.
     
  5. adze67

    adze67 Well-Known Member Silver Stacker

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    Ask them to provide documentation to support their claim on your earnings...
    Surely you signed some sort of contract to give them so much of your money...or did you? ;)
     
  6. AngloSaxon

    AngloSaxon Active Member

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    Upsides and downsides. Someone renting will not have that problem. Capital gains tax, there are ways around that for some aren't there.
     
  7. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Why?
    Technically not a problem.
    No different to the "business" Porsche.
     
  8. Golightly

    Golightly Well-Known Member Silver Stacker

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    Just don't pay it, it impedes on your rights as a free born human, it's a VOLUNTARY OBLIGATION, only by signing off on your tax deceleration are you agreeing to pay it.
     
  9. Elemental

    Elemental Active Member Silver Stacker

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    Most of those deductions are borderline and probably would be disallowed if audited. Dinners out definitly not claimable. He would get in extra trouble if he is an accountant and should know better.

    Apart from the obviously undeclared income (which an auditor would find in a second - and the ATO is getting much better at detecting automatically) the biggest problem with this one is children can't receive income from a trust until they are 18. Maximum they can receive is 442 or some similar small amount (used to be $3,000 - changed a few years ago) otherwise they are taxed at the top marginal rate.

    Really only mum and dad that can get the distribution. You could actually employ and pay the kids but the money is technically theirs (also subject to all labor laws super etc etc) and there is a risk when they get a bit older, you have a falling out (they end up with a arsehole boyfriend/girlfriend in their ear) and they can actually take you to the cleaners for entitlements unpaid leave and everything else that goes along with it. Probably not a big risk but one worth considering and I've seen it happen before with drug affected children and big money in trusts.

    The main idea with minimising tax is get the structure right at the outset. Plan your exit strategy as to make use of all available concessions. You can lawfully defer but can generally not avoid paying tax. At the end of the day, some people will have more risk appetite for avoidance. I prefer to sleep soundly at night with a reasonably arguable position if the tax man ever come knocking.
     
  10. Elemental

    Elemental Active Member Silver Stacker

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    A side note to the above. Apart from the obvious things not to do (cash out of the till etc), I think there are a lot of positives and that set up could work very well.

    You'd need to have the right family group to avoid the problems I mentioned above. Given that, if the kids are of working age I see no problem at all with actually employing them and paying them a casual wage from the trust. They would have to properly work for their money. No leave entitlements on casual salary so all you need to keep up with is the minimum wage and realistically you would be paying them well above award as you want to make sure they are getting their $18,000 a year. The tax benefit is secondary to the kids learning the value of money. They earn it and then pay some back for board and food etc.

    I would take it a step further and set up an SMSF with the children as members and pay their super into that - another vehicle to accumulate family wealth and teach the children about money management.
     
  11. SilverDJ

    SilverDJ Well-Known Member

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    Because your are lying, and will be asked to prove your claim.
    If you use the business Porshe for any private use, then you can only claim the business part of it. And you can't claim travelling to and from work regardless of your business structure. And you get hit with FBT on the private usage as well.
    I just went through this extensively with my accountant, whether or not to buy a new car privately or under the PtyLtd. Because the majority of my use was private, it didn't make sense to buy it under the business. To do so would have required me to lie and fudge the log books.
     
  12. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Like I first thought..... no problems.
     
  13. SilverDJ

    SilverDJ Well-Known Member

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    If you want to lie to and cheat the tax department, that's your issue, but it's poor form to encourage others to do so or give knowingly dubious advice as if it's not a problem.
     
  14. SilverDJ

    SilverDJ Well-Known Member

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    Correct, unless you have some elaborate offshore scheme like the big players do.
    I went through this extensively with multiple accountats about whether to got Pty Ltd or stay sole trader, whether to have trusts or not, have the company owned by the trust etc. And in the end it came down to the basic fact that the tax system rigged is so that they get their money either way. It all comes out in the wash. Yes, you can defer tax, but can't really avoid it legally. You can do some small things to help here and there, but it's pretty small fry stuff in the end.

    Yep, it's just not worth the grief. Tax is a good problem to have, it means you are earning a lot.
     
  15. JulieW

    JulieW Well-Known Member Silver Stacker

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    Probably sooner rather than later considering this is a public internet board.

    Render unto Caesar, he has a lot of spies and accountants.
     
  16. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    .... Says a member of a forum that focuses on buying and selling PM's via the cash economy.
    :rolleyes:
     
  17. Chubbsng

    Chubbsng Member Silver Stacker

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    Having a company is what the top end do. The highest company tax rate is 30%. You then have control of what money can be used or left in the company and that has an effect on how you are assessed as an individual.

    May not be an option for you if you are a PAYG earner of course and in that case negative gearing is the go on property.

    Claiming home office and those type of deduction do count but in the scheme of the things are often not that an impressive saving.

    You have your company buy the houses and cars that you use. There are FBT tax implications and that needs to be paid but it's extremely low in comparison to normal tax.

    A good, well experienced accountant is a necessity but you still need to have a plan. Reading as many books as possible is the best start.

    Elemental's posts here are all spot on.

    I have had 2 audits from the ATO for my companies. it's extremely un-fun but I didn't have a problem as the structure was created correctly from the start and everything was within the rules. The problem can be however that the ATO can't tell you what's acceptable until you have done it and then you battle it out from there.

    Tax is a good problem to have and of course it's our job to minimise it. Have fun!

    P.S pay your accountant for audit insurance. Trust me, do it!
     
  18. petey

    petey Active Member Silver Stacker

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    Move to Thailand.
    Work for HK Company.
    HK Company provides work for businesses in countries outside of HK.
     
  19. zedstrange

    zedstrange Member

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    Earn more money. I guarantee your tax bill will reduce relative to your gross income.
     

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