What are these people doing in order to pay no tax?

LTanyaDD on 20/08/2020 - 14:37

I'm sure lots of you have been getting your tax return documents in order over the last month, so this is just a discussion (not for accounting or legal advice) for news reports like this:

https://www.abc.net.au/news/2020-07-18/tax-stats-2017-18-ato…

"There were 14,907 Australians who declared a total income of more than $1 million in 2017-18." and
"However, out of that millionaire group, the data also show 73 paid no net tax in 2017-18. For 54 of those millionaire earners, that was because they had enough deductions to lower their taxable income below the tax-free threshold of $18,200."

What do you think these people are doing to reduce their taxable income by that much?
Making a deduction is one thing, getting it back (or most of it back) is another.

I have an accountant, and am not in this million dollar category, but some examples of possible deductions would be interesting to talk about.

Financial

Comments

  • bemybubble on 20/08/2020 - 14:40
    +26

    Negative gearing is a major one.

    Some people are structured in entities that can stream their income across multiple entities and people which lower their taxable income.

    • leiiv on 23/08/2020 - 09:32

      What does it mean by "structured in entities" in practice?

      • bemybubble on 23/08/2020 - 09:40

        Companies. Trusts. Superfunds etc

    • Laurenlauren on 23/08/2020 - 20:47

      The statistics suggest this is a generous group, at least in terms of donations and gifts that are tax deductible, which totalled just over $1.4 billion and made up almost three-quarters of the gap between total and taxable incomes.

      Negative gearing property does not seem to be a strategy favoured by this ultra-high earning group, with net rental losses of just $121.3 million claimed between them, and a modest rental profit of almost $20 million reported overall.

      • cheapo123 on 11/11/2021 - 23:17
        +2

        getting paid in assets is also one, then those assets are used to as collateral

  • Drakesy on 20/08/2020 - 14:49
    +19

    Charity, 'losing' money on their house/s through negative gearing, i think one was pinged for spending $1,000,000+ on financial accounting services. The tax system in Australia has for a while favoured those in the higher tax bracket/those that are more educated. Plus the cushy tax breaks offered by investment properties resulting in house prices much higher than they should be.

    • lubos on 20/08/2020 - 16:59
      +40

      The tax system in Australia has for a while favoured those in the higher tax bracket/those that are more educated.

      If they are being favoured, how come people in the higher tax brackets pay the biggest proportion of income taxes in Australia. Someone below said the top 9% of tax payers pay 48% of all income tax.

      Let's stop this imaginary crusade against high-income earners. They do pay income taxes - a lot of income tax.

      73 people with income over $1,000,000 managed to pay no income tax. It could have been someone's grandma who is downsizing. She sold her home after 40 years and realized $1,000,000+ in capital gains which is tax-free income.

      • Mechz on 20/08/2020 - 18:24
        -7

        They might pay the most tax but you can bet they also claim the most deductions.

        • Soluble on 20/08/2020 - 18:40
          +19

          probably because they have the most deductions?

          • knk on 21/08/2020 - 14:19
            +4

            @Soluble: Who would've thought, high income earners have more investment losses than those that don't? /s

      • [Deactivated] on 21/08/2020 - 09:47
        -7

        Let's stop this imaginary crusade against high-income earners. They do pay income taxes - too much a lot of income tax.

        FTFY

      • steve84 on 21/08/2020 - 16:12
        +7

        Selling your primary residence isn’t income so the grandma wouldn’t have had that on her tax statement

        • lubos on 21/08/2020 - 16:38
          -3

          Not sure what you are referring to but selling your PPOR is on your tax return.

          • steve84 on 21/08/2020 - 17:54
            +2

            @lubos: Got schooled

          • kiitos on 22/08/2020 - 09:37

            @lubos: Presumably that is because it could affect the cgt status of other properties you still hold, eg an investment that you then move into because you sold your poor?

          • bobbieb on 22/08/2020 - 15:12
            +2

            @lubos: Only under exceptional circumstances.

            From the same link that you gave:

            You need to know

            snip

            Generally, you disregard a capital gain or capital loss on:

            • disposal of your main residence, if you were an Australian resident for tax purposes when you signed the sale contract
              …

            It outlines the exceptions further down…

            Your home may be subject to capital gains tax

            Under the 'main residence exemption', you generally do not have to pay CGT on the disposal of your main residence if you are an Australian resident for tax purposes at the time of the disposal. However, you may have to pay tax on some of your capital gain if:

            • the property was not your main residence for the whole period you owned it
            • you used the property, or part of it, to produce assessable income (for example, you rented it out)
            • the land area was greater than two hectares.
      • Hvrd on 21/08/2020 - 18:50
        +6

        poorer people pay a higher proportion of their income on tax then the rich

        • bmerigan on 21/08/2020 - 22:57
          -5

          You need to have some motivation to earn more don't you?

          • No ONE on 22/08/2020 - 00:34
            +6

            @bmerigan:

            You need to have some motivation …

            Or a mate who is a MP/minister.

          • bmerigan on 22/08/2020 - 09:20
            -8

            @bmerigan: LOL at the downvote butthurt people

          • smartazz104 on 22/08/2020 - 11:40
            +16

            @bmerigan: That’s right, people should just stop being poor.

            • bmerigan on 22/08/2020 - 12:44
              -3

              @smartazz104: If I didn't have a job I'd be poor too.
              So I guess by getting a job, keeping a job, and improving myself to get better jobs, I did stop being poor. Are you suggesting what I did is not possible?

        • TheBird on 22/08/2020 - 21:38
          +2

          poorer people pay a higher proportion of their income on tax then the rich

          How do you figure that? The poorest people are usually on some sort of social support and under the tax free threshold. About 40% of the people in Australia pay no income tax.

          • Hvrd on 23/08/2020 - 14:02
            -3

            @TheBird: something about the top one percent own 50% of wealth but contribute less than 50% of tax revenue

              • Hvrd on 23/08/2020 - 19:36

                @[Deactivated]: good stats there, yep progressive tax means richer do pay a higher % but it should be more with how much they benefit from capitalism.

                • TheBird on 24/08/2020 - 17:11

                  @Hvrd:

                  progressive tax means richer do pay a higher % but it should be more with how much they benefit from capitalism.

                  They should pay more and they do pay more. They also often get vilified by the ignorant for it too.

                  It's an odd system. One way to look at it is the rich minority pay the bills for the poor majority and for some unknown reason the poor hate the rich for not giving them more.

                  Look, I know how easy it is to get all worked up over this topic. There's a lot of fake news out there stirring up emotions and fears. I'd imagine a lot of it looks legit to those who don't know better and it seems to resonate with those less fortunate.

                  The truth of it is we have one of the best tax systems in the world and it affords one of the best quality of life safety blankets to those less fortunate. Those who are lucky enough to be among the rich and the middle classes, through taxes help pay for a better life who weren't as lucky. Infrastructure, emergency services, welfare, medical and many other government and social services. Should they? Yes of course. Do they? Yes they do.

      • WinstonWithAY on 21/08/2020 - 20:05
        +10

        I hope you're getting some money for licking the boots of the rich. Keep making up stories as to why people earning over $1 million a year are paying $0 in income tax, and why the very rich pay a lower tax rate as a percentage of income than working class individuals. They earn an incredibly larger amount of money so of course they pay more tax as a block.

        https://www.theage.com.au/money/tax/how-a-millionaire-pays-n…

        • R-Man on 23/08/2020 - 11:17

          What is the average tax paid as % of income for workers class vs rich people?

          Couldn't see it in your link but saw the same "70 people paying $0 tax" which was discussed above

      • No ONE on 22/08/2020 - 00:30
        +3

        Capital loss can only be offset against capital gain, not against income. The question is still, how the (profanity) they still have that much deductions?

        • lubos on 22/08/2020 - 09:12

          Donating 100% of their income to charity?

          A lot of people with multi-generational wealth are asset rich and income poor. For these people it's quite easy to give away in charitable giving more than they actually earn. This is how you end up with no income tax.

          • core101 on 24/08/2020 - 13:45

            @lubos: Strange that wealthy people tend to setup their own charities.

            • lubos on 24/08/2020 - 17:58

              @core101: And isn't that wonderful? You can't personally benefit from a charity. Any non-cash benefits you receive from charity are subject to fringe benefits tax and cash benefits (such as salary) would be subject to income tax defeating the purpose of putting your money into charity in the first place.

      • funnysht on 23/08/2020 - 20:32

        What defines high tax bracket..if it's more than 140k.. then that 48% is prob lawyers doctors engineers etc paying those taxes. The super rich >1millino a year contiribute very little to that 48% i suspect

    • 30Something on 21/08/2020 - 20:39

      How does the financial accounting services justify that much fees, plus do they give some cash back else why would someone pay an accountant 1m.. I am confused

      • bmerigan on 21/08/2020 - 23:01
        +6

        The accounting company is owned by a family member. Just move the money around within the family.
        e.g., One family member owns the investment properties, the others rent the properties.
        One has a tax accounting company.
        One has a building company.
        One has a car lease company.
        Overcharge each others business's for services, which is then used as a deduction.

        • 30Something on 22/08/2020 - 01:59
          +2

          But then the liability is simply shifted to accounting firm who then has to pay tax on its profit…
          I think Australian tax system is pretty solid and ATO does a good job monitoring these activities… ofcourse that's only my opinion

    • arcticmonkey on 22/08/2020 - 05:03
      +4

      Labor was going to cancel some of this social welfare for the rich and reinvest back into health, hospitals and cancer treatment.

      Unfortunately welfare for the elite won out. We are still losing billions and cancer is still expensive (costing five figures) if you're unlucky to get it.

      The liberals will be bringing in huge tax cuts for the rich too which means more service cuts

      • BadHorse on 22/08/2020 - 19:47
        +6

        It's bewildering to me why people keep voting against their own self interest in this sense.

        Let's vote in a massive tax cut so someone on $45k pays the same rate of tax as someone on $200k - just because I can see myself maybe earning that much in future. People don't appreciate the scale of things. I think it's called temporarily embarrassed millionaire.

        Still frustrates me that Labor is just as complacent and scare of shaking the apple cart again and just letting this sail on through.

  • Zephyrus on 20/08/2020 - 15:05
    +8

    A common one is that they made investment losses in the past. i.e. you made a lot of money trading shares but also lost a bunch.

    • hakkenuh on 20/08/2020 - 19:35
      -7

      This only works for capital gains, not income tax.

      • Zephyrus on 20/08/2020 - 19:41

        Capital gains are part of your income tax return.

        • Mentallysick on 20/08/2020 - 20:19
          +1

          It is a part of income tax return but you can only use it against capital losses.

          • Zephyrus on 20/08/2020 - 21:40
            +9

            @Mentallysick: Which is what I said?
            You trade sell shares and make 2 million, you sell some other shares and lose 2 million. Taxable income of 2 million with 2 million in deductions, no tax paid.

  • dust on 20/08/2020 - 15:08
    +7

    Lots of franking credits?

  • mskeggs on 20/08/2020 - 15:14

    If you pay $1m to handle your tax affairs, it is a deduction.
    Or maybe declared $1m in foreign income that was taxed in that jurisdiction.

  • Baysew on 20/08/2020 - 15:18
    +2

    They simply make a large enough tax deductible donation to charity to reduce their taxable income below the tax free threshold. (And then get a maximum refund of franking credits)

    The statistics suggest this is a generous group, at least in terms of donations and gifts that are tax deductible, which totalled just over $1.4 billion and made up almost three-quarters of the gap between total and taxable incomes.

    • brendanm on 20/08/2020 - 16:26
      -3

      So you're saying I should start my own charity, "donate" my wages to it, then have the funds dispersed to a family trust or similar? I wonder what the costs to set up a charity are.

      • SlartiBartFozz on 21/08/2020 - 13:52

        Technically no cost:
        https://www.acnc.gov.au/for-charities/start-charity
        However providing adequate documentation to prove you have a legitimate charity, on an ongoing basis is costly and time-consuming, probably easier for someone who works in management of an existing charity. Many celebrities start charities to offset their income, but they start with substantial income to begin with.

      • bmerigan on 21/08/2020 - 23:04
        +2

        Sort of yes. You can employ all your family members on a good wage in various positions within the charity

    • SlartiBartFozz on 21/08/2020 - 13:52

      Can you get franking credits from donations ?

      • TheBird on 22/08/2020 - 21:44

        No you cannot.

  • TheBilly on 20/08/2020 - 15:26
    +13

    It could be sensationalist. For example if you earn revenue as a sole trader, and this revenue is $1 million. Technically you are a tax payer earning $1 million. But what if yoir job was to sell tea towels and they cost you $950k to sell in the first place. The only real important figure here is profit. Then deductions bring you down and down and down on that profit. I.e. investment property, motor vehicle etc.

    • Scantu on 20/08/2020 - 20:27
      +2

      This explanation doesn't really work out - if anyone is doing work with a turnover more than a few 10's, they would not be doing it in a personal (sole trader) capacity. So it would not be personal deducitons at that pt.

      • TheBilly on 20/08/2020 - 21:21
        +7

        As a builder my example stacks up no problem, 3 houses a year. Developer. Dentist. Retailer. Car salesman. All sorts of jobs.

        • Scantu on 20/08/2020 - 21:32
          +13

          Sorry yes - an intelligent person would not be carrying that amount of business under a sole tradership.

          Just joking but please form a corporation or something before someone sues you and recovers against your personal assets…

  • [Deactivated] on 20/08/2020 - 15:31
    +4

    Given that it's only 54 people it would be fairly safe to bet they have enough cash that they didn't need an income so only paid themselves from their investments an amount equal to their charitable donations / deductions. I don't think there's a huge secret here. Give away almost all your earnings to charity and you too don't have to pay tax.

  • Donaldhump on 20/08/2020 - 15:35
    +2

    sacrifice anything over 90k that you can fit in your super cap, to super. instant 27% return for anything under 126000k.

    • Muzeeb on 20/08/2020 - 15:38
      +1

      Then deduct 2x$10k

      • Drakesy on 20/08/2020 - 16:18

        The classic Superannuation circlejerk. The non-clued people spend their super, the others dump it straight back in for ~$3k in tax back

        • brendanm on 20/08/2020 - 16:27
          +6

          I wonder if you would need more or less than $3k worth of lube when the ato audits you?

          • Drakesy on 20/08/2020 - 16:32
            +5

            @brendanm: it's gonna be a good reaming either way.

            Though if you were smart and lost your job / were made redundant it's a perfectly legal loophole in the system - though frowned upon. But hey superannuation should never of been used as an emergency measure, it's always been there to fund your retirement. I personally don't agree with the scheme as it's effectively withdrawing from your future, the compound interest lost would be huge and just placing more of a demand on the pension system in the future.

            • Stoozer on 21/08/2020 - 08:07

              @Drakesy: I think the Government helped solve the looming age pension crisis by allowing over $30 billion covid early release of super if it forces more of us to work longer than we would have without the release. There is never a funding issue for the age pension but we do need to make sure there are goods available for purchase at the time the pension is paid. Currently there are 5 workers producing all the stuff for themselves and every pensioner, this is projected to reduce to 3 workers for every pensioner in the future, unless those 3 workers are very productive doing the same output as 5 workers we will face an inflation problem because our money is competing for too few goods and services available for sale.

            • serpserpserp on 21/08/2020 - 18:19

              @Drakesy:

              placing more of a demand on the pension system in the future.

              You assume in 20 years we are still going to have a pension system…

              • Drakesy on 21/08/2020 - 21:13

                @serpserpserp: We will if there's no super to fall back on 🙃

                • serpserpserp on 21/08/2020 - 21:49
                  +3

                  @Drakesy: Most likely there will be no pension in 20 years if the Libs have anything to do with it. Will there be enough super for everyone? Not at all. Regardless of the tax incentives and how the markets perform. The cost of aged care living will be so high that the average worker will not have enough.

                  Plus they'll also be in a position of no home ownership either. 🙃

                  • Stoozer on 22/08/2020 - 08:27
                    +1

                    @serpserpserp: Why would there be no pension system in 20 years? I can't think of a single reason.

                    • serpserpserp on 22/08/2020 - 12:50

                      @Stoozer: Can't tell if you are being ironic or not.

                      Short answer is the government won't be able to afford it. The Super system was designed to hopefully take over the pension system.

                      • Stoozer on 23/08/2020 - 13:58
                        +1

                        @serpserpserp: So you think it is possible for the Australian Government to run out of Australian Dollars when they are the monopoly issuer of the Australian Dollar. Let me offer you some comfort, they can never run out of money and can always buy anything that is available for sale in A$, this includes paying state pensions.

                        • serpserpserp on 23/08/2020 - 17:44

                          @Stoozer:

                          So you think it is possible for the Australian Government to run out of Australian Dollars

                          No I didn't say that anywhere

                          always buy anything that is available for sale in A$, this includes paying state pensions.

                          LOL on this basis we should have free University, free schooling, should be able to pay government essential service workers first class wages, free aged care facilities. The list goes on. Must be some reason they don't? Wonder what that could be? Shrugs

                          • Stoozer on 24/08/2020 - 08:34

                            @serpserpserp: What do you mean they won't be able to afford it?

                            Yes university and other stuff could be provided free but there would likely be an increase in students greater than the capacity of the universities so you would need to put a system in place first that can cope with the influx of students. This could include training more lecturers, tutors etc, building more universities, creating jobs for when the students graduate. It can always be funded the only issue is the real capacity of the economy

                  • Drakesy on 24/08/2020 - 12:42

                    @serpserpserp: At the end of the day the government will never be able to abolish the pension as the biggest voting block will be the boomers who will slowly end up in or on the pension zone. Unfortunately as long as they have the power Australia will always be favouring their generation, similar with negative gearing which is cherished by them.

                    • Stoozer on 24/08/2020 - 16:44

                      @Drakesy: It should be mandatory for everyone to read this book.

                      The Deficit Myth by Stephanie Kelton

    • Caped Baldy on 20/08/2020 - 15:52

      So that's because the super is taxed at 15% and the net pay hasn't been reduced when you get paid?

  • BOGOF on 20/08/2020 - 16:18
    +12

    The very rich are not employees in the traditional sense, in that they don't pay PAYG. These individuals are directors and/or shareholders of companies and trusts.This means their accountants (& where needed) tax lawyers can advise on the benefits of where and when tax is paid. For example it may be beneficial for a company to pay company tax on profits, and issue a fully franked dividend to the millionaire shareholder who only pays the tax difference required. Company and personal expenses offset are a huge way to get a benefit and reduce tax, with of course FBT when payable.

    I'm not an expert because I don't receive in excess of a million dollars in income, and I pay a substantial amount of income tax, however, as others have pointed out the main ways they reduce their tax burden is:-

    • Negative gearing on property. Although the property should be appreciating, as the long term benefits will be lost
    • Bringing forward losses from a previous tax year
    • Receiving fully franked dividends
    • Spreading the tax burden and reducing the tax threshold by using family trusts
    • Business related expenses.
    • legitimate tax deductions
    • One off donations to charities and/or political parties to get under a tax bracket
    • Voluntary super contributions to the maximum cap
    • dazweeja on 20/08/2020 - 16:33
      +2

      How does it help to donate to charities and/or political parties to get under a tax bracket? You are only taxed on the income in that bracket, right? So how does it help to give away 100% to avoid giving the government 45% of that money?

      I can only see that helping with the Medicare levy.

      • lubos on 20/08/2020 - 17:13
        +5

        They are not avoiding it.

        Let's say you own company so you pay yourself how much you want to pay yourself. But you really don't need to pay yourself anything because you just inherited $5,000,000 so enough money to sustain yourself.

        At the end of the year, your accountant will tell you you have donated $1.3M to various parties. Your accountant will suggest your company pay you on the paper just enough to offset this so you are not wasting your tax deductions.

        You are not avoiding income tax, you are avoiding wasting your deductions.

        • taoz on 22/08/2020 - 23:31
          +1

          somehthing like this is likely the reason.
          Be a fair few people who are very well off, donate heavily, may get paid a wage from royalties, familty business, etc etc, but decide to donate most of it .

          • [Deactivated] on 25/08/2020 - 04:00

            @taoz: Yep, if you already have millions in the bank and your 'income' is whatever you want it to be, no point in making it anything above what you can deduct if you can just defer 'earning' it and keep it invested / compounding.

            The other thing that is notable that came up with franking credit refunds is that you can defer franking credits within the right structure for years, so while working and in a higher tax bracket you can simply not distribute the franking credits/income and then when you are retired and not earning any PAYG income you can 'redeem' your earnings from prior years and get a refund for tax paid by your company…..

            • leiiv on 25/08/2020 - 09:11

              @[Deactivated]: But the bigger question is: did you acquire the millions already in the banks through ways that avoid paying the >30% tax?

              • [Deactivated] on 25/08/2020 - 12:11

                @leiiv: Inheritance isn't taxed…. :\

                • leiiv on 25/08/2020 - 13:13

                  @[Deactivated]: True, but then before the money was inherited, it did come from after-tax income. The only source of tax-free income is if you can make a huge capital gain from the principal residence. But you still need somewhere to live anyway.

                  • [Deactivated] on 25/08/2020 - 13:36

                    @leiiv: Not if it was via insurance bonds. Or if it came in from overseas. Or, as you point out, a PPOR. Or offset against losses, or distributed below the tax free threshold, or from a life insurance policy, or a lotto win, or compensation. And capital gains tax hasn't always existed (only since 1985), there are plenty of assets still around not subject to it, though obviously that will diminish over time if not passed down to the next generation.

                    Capital gains are at a 50% discount as well.

                    So yeah, maybe after tax, but maybe that after tax was 0 or close to 0.

      • lubos on 20/08/2020 - 19:02
        +9

        Stop spreading non-sense and look up income tax rates for minors. There is no loophole. Tax-free threshhold is only up to $416 per year and anything over $1,307 is taxed at the top marginal rate.

        • [Deactivated] on 25/08/2020 - 13:42

          You can get around that with insurance bonds ;) It's not that simple (you need to keep the money invested in the bond for 10 years) but then it can be withdrawn tax free.

          • lubos on 25/08/2020 - 14:37

            @[Deactivated]: You are not getting around that with insurance bonds since:

            Tax is still paid internally 30% and yes - it's true it's less than 47% (top marginal rate + medicare levy) but you are missing out on 50% capital gains tax discount which can be substantial over 10 years. Not to mention the fees you have to pay.

            Run the numbers and you will see it's generally bad idea. If you'd have invested in insurance bonds 10 years ago and withdrawing today you'd have less money than someone who simply invested directly with their after-tax income.

            • [Deactivated] on 25/08/2020 - 17:37

              @lubos: There's some really misinformed articles out there about insurance bonds (mostly from information about investment bonds of which insurance bonds are a very special type).

              Mostly they're used for estate planning, for one, you don't pay any capital gains within the insurance bond when switching underlying investments, unlike investing directly from after tax income. Secondly insurance bonds (linked to a death benefit) don't pay any CGT after 10 years or on death of the policy holder: (see ATO Private Binding Ruling 1051570480202 )

              • Franking credits typically offset income so not much net tax is paid internally. (yes, these would also offset income outside so not a huge difference there), the company tax rate is also scheduled to decrease to 25% which will improve this.

              Agree on fees though, I'll bet lots of people lose lots of the benefit through fees.

              Also worth noting as long as you don't invest more than 125% of the prior year you can keep growing the bond with investments without extending the 10 year tax free deadline, and at the end of the 10 years you don't need to actually withdraw it, so you can keep it compounding away and throwing more money in there.

              Basically you're not investing in an asset you're buying an insurance policy which is backed by the value of the underlying assets, it's either paid out when you die, or at any point after 10 years you can 'surrender' the policy for a 'bonus' which is a CGT event that is disregarded. (see INCOME TAX ASSESSMENT ACT 1997 - SECT 118.300)

              There's so much crazy shit in the tax system. I had to scratch my head when I worked on a financial product that lent you money to invest but would only let you invest half of it (with the other half locked away), because the ATO lets you tax deduct loans of up to 200% of your investment value but also has a cap on the interest rate you can deduct so this is a perfectly legal loophole to let you deduct more….

              • lubos on 25/08/2020 - 19:58

                @[Deactivated]:

                Mostly they're used for estate planning, for one, you don't pay any capital gains within the insurance bond when switching underlying investments, unlike investing directly from after tax income.

                This is not a big deal. These days you have quality EFT funds which rebalance your investment without triggering CGT event too.

                Secondly insurance bonds (linked to a death benefit) don't pay any CGT after 10 years

                That's because CGT tax 30% has been paid by the insurance company.

                Also worth noting as long as you don't invest more than 125% of the prior year you can keep growing the bond with investments without extending the 10 year tax free deadline, and at the end of the 10 years you don't need to actually withdraw it, so you can keep it compounding away and throwing more money in there.

                And wasting more money on management fees…

                If investing in insurance bonds would be tax-deductible like concessional contributions into Super, then insurance bonds would be very attractive. But you are investing your after-tax dollars to avoid 22.5% CGT when your insurance bonds will pay 30% on your behalf. Now you tell me on what planet 22.5% is more than 30%.

        • lubos on 21/08/2020 - 09:53
          +5

          I don’t know the technicalities

          That explains why you are wrong. There is no "back door".

          • WinstonWithAY on 21/08/2020 - 20:08

            @lubos: How uninformed can you be? There are back doors.

            • lubos on 21/08/2020 - 20:33

              @WinstonWithAY: so how does this back door works? yeah… I thought so…

              • WinstonWithAY on 21/08/2020 - 20:40
                -4

                @lubos: I literally linked an article above to one of your other bootlicker responses that details one of the many ways people do it. Stop defending the rich

                • lubos on 21/08/2020 - 22:09
                  +3

                  @WinstonWithAY: The article doesn't answer the question how does millionaire pays no tax. It actually concedes that "99 per cent of people who earned more than $1 million remained in the top tax bracket after deductions."

                  So perhaps next time when you post article, read it first. Not just the clickbait headline.

    • Scantu on 20/08/2020 - 21:55
      +2

      Say it with me - going in a lower tax bracket means that I am making less money not that I am paying less tax

    • kiitos on 21/08/2020 - 08:41
      +1

      Are family trusts still heavily used? I thought there was some sort of crackdown/scrutiny of them.

      • BigBirdy on 21/08/2020 - 08:52
        +6

        That was Labor policy at the last fed election. Labor lost, so no crackdown.

      • BOGOF on 21/08/2020 - 08:59
        +4

        They are heavily used. In 2017 there were 800,000 trusts, and the ATO expects them to be over a million by 2022. The tax laws around trusts are constantly adapting. The following article by the ATO gives good insight into current issues with trusts and how the ATO manages them.
        https://www.ato.gov.au/about-ato/research-and-statistics/in-…

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