Tax time

smilearchitect on 09/05/2015 - 22:29

Hi

I have a peculiar scenario …
For arguments sake of I earn 100k$ and the tax rate is 50k$
My accountant says I have to cough up the 50k$ to tax man …which I feel is unfair .
According to him I have to concentrate more on increasing that 100k $ income …. But my point is if income increases their is a proportional increase in tax !!! Say if I work hard and make 200k$… The tax may proportionally increase to 100k$ (hypothetical assumption, am not quoting the actual rates by ato…)
I have asked him some tax minimisation strategies and only thing he said was put more money in super combine super with partner and or buy a negative geared property , having a family trust … And he says that's the only option available ….!
I am but concerned with that advise … What do you guys reckon ?????

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Comments

    • tomclancy on 12/05/2015 - 13:17
      +2

      If you are really worried about just tax… you should look into converting your business structure to a company

      Poor advice. Companies give better protection/liability control over sole traders. The family group taxes would be identical under both structures.

      there is a lot more a company can do tax-wise than a sole trader

      Name one. Tax laws are designed to see function over form. There is not a single deduction available to a company that is not available to a sole trader operating the same business model. Actually there is… the ASIC annual review fees that you have to pay for being a company.

      the tax rate is only 30% for companies

      True. So now the profits are trapped in the company, how do you get them out? Do you realise there are personal taxes at the marginal rates for dividends and directors fees?

      It's pretty obvious you don't have any accounting background and I'm guessing you've heard these anecdotes from family/friends. Please stop giving totally false advice to people on accounting and tax matters.

      • Tarnos on 12/05/2015 - 22:32
        -1

        (Edited) Ok

  • jellykingdom on 12/05/2015 - 09:23

    Frankly I'm not entirely sure what is going on in this post

    1) What about paying tax and wanting to pay less tax is unusual…?

    2) Are you simply asking what are other strategies to minimise said tax?

    Surely if it is your business you can have some control over what is cash-in-hand work? All tradespeople will ask for cash first, or give a discount, because they don't have to process it and claim it as income

    • sickllama on 12/05/2015 - 21:12
      +2

      "All tradespeople will ask for cash first, or give a discount, because they don't have to process it and claim it as income"

      Only criminal tradespeople. Honest tradespeople (who still may prefer cash for legitimate reasons) will declare all income. Not doing so is stealing from their follow Australians and as I said makes them a criminal.

      • expertreader on 13/05/2015 - 08:13
        +1

        Fellow

      • jellykingdom on 13/05/2015 - 09:13
        +2

        Really? Tradespeople will want cash for a "legitimate" reason? And what reasons might that be?

        • sickllama on 13/05/2015 - 10:25
          -1

          More effective to budget with cash, prefer to deal with cash over dealing with banks. Maybe google why should I use cash if its still stumping you.

        • jellykingdom on 13/05/2015 - 17:00
          +2

          @sickllama:

          Mate i think you're living in a fantasy land. Find a tradie, and ask him (or her)

  • tohara on 12/05/2015 - 09:32
    +6

    i don't blame OPs accounting for providing short, sharp sweet advice. If i were getting stupid questions like that i wouldn't be devoting a lot of time answering them with too much effort

  • Brainwhacker on 12/05/2015 - 21:16

    For that fee your accountant doesnt seem to be the right choice. No doubt you have to pay your fair share of taxes but the amount can be legitimately minimized; In the case of ABN - claiming maximum allowable deductions, negative gearing etc. Regardless of the amount of income used in above example, the objective should always be to minimize taxes through proper tax planning. Even more-so for ozbargainers! Take maximum advantage of the budget incentives as well!!

  • zealmax on 13/05/2015 - 09:54

    I would get an investment property and then throw everything left into super. Live on baked beans and woollies 85c bread. You may end up paying no tax or minimal tax, at the cost of your life style.

  • sillyguy on 13/05/2015 - 16:14
    +2

    50K taxed on 100K gross income??? No way! You're not telling the truth because this is the calculation that I got, roughly:

    Base income: $100000.00
    Tax on income: $24934.00
    Medicare Levy: $2000.00

    Total tax: $26934.00

  • zeomega on 13/05/2015 - 20:41
    +5

    STOP FEEDING THE TROLL.

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