When I tell people what I do, that I help high-income earners pay less taxes, I inevitably hear two main complaints. It’s truly riveting party talk, I’ll tell you.
The first is, “I hate paying taxes! But I don’t want to do anything illegal like those corrupt bastards in the 1%”.
The second is “It’s not worth it to make a lot of money. The ATO is just going to tax it higher anyway”.
These are valid concerns, and I can sympathize with what I’m hearing. And while each situation is unique, I can show you how I legally can help you pay less tax and put thousands more of your dollars back into your pocket. You earned it. You might as well keep it.
“…if anybody in this country doesn’t minimize their tax, they want their heads read because as a government, I can tell you you’re not spending it that well that we should be donating extra”Kerry Packer
Let’s be honest. Do you believe the government is doing such a crash-hot job that you’re willing to donate more of your money to help them do it? I didn’t think so. Just like Mr. Packer, I believe that anybody who doesn’t want to find ways to reduce their tax burden is due to see a shrink.
What I’m going to show you now made me a pariah at the tax office. Yes, I used to work as one of the “bad guys”, an auditor for the ATO for 10 years. But doing so gave me a unique perspective on how the big earners of this country see tax as optional, almost a game in which they outcompete each other to pay less money than the rest of us.
And I can see why.
In Australia, the tax laws make it so that the highest earners of the country are taxed at unbelievably high rates. According to an analysis of countries around the world by Price Waterhouse Cooper, Australia is ranked nearly at the top of tax rates for high-income earners.
Take Home Rates for an annual income of $400,000:
If you made $400,000 this year, nobody is happier than those guys at the ATO, where you’re going to pay $164,000 at the very least.
That’s just criminal! And that doesn’t even account for sales tax, GST, capital gains taxes, and all those other added “bonuses” that the ATO expects you to pay.
How, then, do those who earn high incomes pay fewer taxes, sometimes as low as 4-6% of their take-home pay packet? I’ll give you a hint: they aren’t evading taxes. They aren’t lying, cheating, or stealing to keep more of their own money. They just know the ways of paying less to the guys at ATO, using legal and tested means to avoid paying those exorbitantly high tax rates.
But, Warren, How?
I hear you asking. Let me show you what I do.
Working ten years in the tax office gave me a moral obligation to help people just like you do what the rich and wealthy are already doing. I don’t just help the people at the top end of the spectrum. I show everyday Australians how to legally keep more of their own money and save thousands on their tax bills each and every year.
“… a nation to try and tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”Winston Churchill
And what I do has made me famous. Or infamous? I’m not sure which is better. But I’ve been interviewed and featured on programs like the ABC, MSN, and News.com.au. As you can see in this article on the leak of the Panama Papers, I’m the only Australian mentioned who was cleared of any wrongdoing and proven to have a legitimate business. I’ve been able to avoid the dodgy, less-than-legal ways other people are avoiding their tax bills.
Let me first show you what I’m NOT doing.
Using specialist tax planning, asset protection plans, and an insanely thorough knowledge of the international and commercial tax laws (I wrote my damn Honours thesis on Income Tax. Yes, I’m that nerdy about it.), I help people just like you, high-income earners pay less taxes.
It’s ATO compliant…
And it works!!
Let me show you just one way in which I help Australian battlers pay less taxes. And it’s called a Discretionary Trust.
“I shall never use profanity except in discussing taxes”Mark Twain
The trust is set up by the settlor and has an appointor who ultimately oversees the trust. The Trustee manages the trust and determines who are the beneficiaries of the money in the trust. If you want to find a great vehicle to protect your assets and keep more of your money, this is a perfect start.
First, a discretionary trust can have beneficiaries from a wide array of people including spouses, kids, and charities. Taxes are only paid by the people who get the distributions from the trust.
How does it work? The beauty is that you get to choose beneficiaries who have a lower tax bracket and you can distribute the money you earn to take advantage of those lower tax brackets.
It’s so easy for me to slip into tech babble here because I’m so passionate, so let me give you a practical example.
In our little story, we have a typical Aussie battler, Fred, who makes a decent income of $80,000 at his job. But he and his wife Mary also practice some wise real estate investing, and this year they earned an extra $100,000 from their side hustle. Well done, Fred and Mary!
But, uh-oh, the ATO has come sniffing at the door, and if you let them in, they’ll be taking a huge chunk of that money. They didn’t make the wise investment choices. They didn’t do the hard work to earn that money. And it’s not like the government’s doing a bang-up job at spending their cash, not according to the latest budget reports.
But the good news is that Fred set up a discretionary trust for his investment purposes and as the trustee, he can decide how to distribute this money to keep more of it. What they end up doing is splitting it up like this:
You’ll notice that we didn’t “give” Fred any money. Because his income is so high, any extra income will be taxed at the highest rate, currently at 46.5%. So, the money was distributed to Mary. Because she stays at home, she only has to pay $13,500 in taxes. The family company, also known as a holding company or bucket company, is taxed at 30%, so that’s another $9000. The $10,000 given to the church is tax-exempt. The best part is that normally Fred pays that to the church after taxes, but because he’s using a discretionary trust, he pays that money pre-taxes.
In total, they have only paid $22,500 to the ATO. If they had not used a trust, they would owe $46,500 to the ATO and they have to pay that charitable donation out of the after-tax pay packet.
How about a second example? Let’s say Fred is really clearing the big bucks at work and he comes home with a yearly income of $600,000. If that’s all coming into his personal account, that’ll bring the wolves to the door in the form of the ATO and their extremely high tax rates. But if Fred can use a family trust to distribute the income to tax-efficient members of his family, he can save tens of thousands of dollars through smart planning. Better yet, he could distribute the income from his trust into a bucket company which can help to accumulate wealth at much lower tax rates. With this simple move, Fred saves over $150,000 of taxes.
In a third example, we have Fred who’s expanded his business overseas. Being simply fed up with a system that doesn’t support high earners, and traveling extensively for work anyway, he’s become a non-resident of Australia, effectively cutting his tax bill to nothing. By availing himself of the legal offshore structures and abiding by the very strict rules, Fred pays nothing in taxes, saving over $270,000 a year on that same $600,000 income.
What would you do with an extra $24,000 in your account? $150,000? $270,000? It’s like winning your personal Tatt’s lotto…only the money you win was yours all along.
Are there ways to pay even less taxes for high-income earners? Absolutely. I’ve just shown you one way to keep more of your hard-earned money. But by using a combination of strategies and plans, I can show you how to legally keep even more money and protect your assets.
Our job is to protect your money, the legal way. Maybe you’d like to talk about building up tax-efficient structures both here and offshore to protect your income and assets? Maybe you’d like to find out how to use the family trusts and bucket companies to save more of your money? Or maybe you’ve simply had enough of the whole system and are interested in becoming a non-resident of Australia? It’s easier than you think. And we can show you how to do it.
Talk to us today to book a free strategy session to discuss your personal situation.
It’s your money. Do you want to keep more of it?