Just wanted to pick some of your brains as alot of you seem to be really on the ball with financial stuff and Im just young blood starting out.
Noting that this vid Is based in America, are some of these things actually possible to do here in Australia?
thoughts and opinions valid!
https://www.youtube.com/watch?v=Pn10cEm8X_E
"The Undercurrent, The Guide to Legal Tax Evasion"
watch the video…
I don't need to watch a video to know that all forms of tax evasion is illegal.
if you've got nothing to add… then don't?
You're asking for advice. I'm giving it to you by saying that there is nothing legal about tax evasion.
Don't mix the terms. As my lecturer said, avoidance is OK, evasion is not.
fair enough - updated :) got any thoughts as to if any of this is achievable, believable or better yet, Legal
I think you mean tax avoidance.
updated :)
I use tax minimisation techniques that are legal.
Just visit a taxation expert and if you're not an individual you will have ample legal opportunities to pay a max tax rate of 30% or pay basically close to nothing.
Better think how to increase your income or inflow than tinkering with tax.
I watched the video.
No, none of that is applicable to personal taxation as it is all based on corporate tax. Corporate taxation is tax on profit, not income. You can, if you have the setup right, access a similar arrangement as described by @gamechanger up above, but that's pretty basic stuff (family trusts etc etc).
the video near the end did draw refernce to the fact that australian companies where doing this as well.
you said corporate tax, how hard is it to set up a corporation, its just some paperwork isnt it?
if you operate as a sole trader IE have your own business etc, then technically all of that can be counted as profit so therefore these things are entirely possible albeit Douche?
No, a sole trader is a a single business person who makes personal income. You can claim more work related expenses this way, but not a lot else.
A company is a separate legal entity to you. The money your company makes is the company's, not yours.
The question isn't CAN you do it, the question is "is it worth the drama?"
You can't just BE a sole trader or small business, you actually have to do that. I earn a wage, I can't just declare that wage a business earning.
Ball park guess, unless you are earning in excess of 150k a year, it probably isn't worth doing anything other than the old family trust trick. even then, you'd want to be going a LOT higher before you start offshoring your income. Australia's richest 100 of so spend something like 50 million just on the legal tax minimisation strategies (ie, not the ones in this video).
If you are drowning in cash but for some reason hate the idea of taxation just donate it somewhere useful. Otherwise, surely it's better to just pay up, save the headaches and enjoy the benefits taxation brings; a healthy, well educated society that has many well maintained facilities for you to use.
Whether you are a corporation or an individual you are assessed on taxable income (income less deductions allowable for tax)
Sole trader is a bad example - all your business income and expenses are included on your individual tax return and taxed accordingly at your individual tax rate.
Yes companies have lower rates of tax, BUT when you receive a dividend from the company that's added to your personal taxable income and taxed at individual tax rates (though if it is a franked dividend you will receive a tax offset).
One of the main advantages of trusts is income splitting eg if you have a non working spouse the trust can distribute income to him/her instead of you, so you can take advantage of their tax free threshold and lower marginal tax rate.
I would just add that forget trying to set anything like this up unless you have a good tax accountant… There's a bunch of pitfalls..
Otherwise I would set up a family trust, try and have my salary paid into it, and then split the income with my non-working wife. And then find out that the company can't do it, and I've blown a bunch of cash on setting up the trust.
Donate to charity - tax deduction
You'll sleep better at night thinking you've saved tax at the same time helping the less fortunate
Set up a company in the Cayman islands and divert your profits to it?
From what I recall, there was a cry about tax evasion by large companies back in the 80's. It was revealed that Australia had signed international treaties that allowed this to happen. Unknown if those treaties still remain in play. Essentially, these companies were allowed to pay their tax in whatever country they chose if they sent profits off-shore in certain ways. I remember thinking at the time how stupid the Federal Government was to sign such an agreement. This should never have been allowed. If you value Australia, do not consider these sorts of rorts.
The presenter omitted to mention that if you are resident for tax purposes in Australia, tax is payable on all your offshore income no matter where it is reported.
Therein lies the flaw. Offshore individuals who are not Australian residents can do what he says and stay out of the tax net.
If you do what he suggests and don't report the offshore income you are in violation of the tax laws of Australia.
The only way out is to become Non-resident for tax purposes which basically means not living here.
And even not living here might not be sufficient because "tax residency" has different criteria from "residency", mainly to do with financial ties to Australia.
There is no such thing as legal tax evasion.