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Don't want to end up here? Learn how to pay less taxes legally
It’s my passion in life, my personal mantra and motto to show people how to pay less taxes legally. A decade of being one of the “bad guys”, a tax auditor for the ATO, has given me nothing but a renewed passion to reduce the tax burdens of Australians everywhere.
Most people assume that the ATO are a bunch of bumbling fools that couldn’t find their feet with a map. I don’t assume that. After working there for ten years, I know it. And if you’re convinced that the Australian government is a bunch of gold-digging predators, why would you want to give them more of your money?
It’s not only possible. It’s highly recommended.
Each year, the Australian Taxation Office releases statistics about the 14+ million tax returns they receive each year. To my nerdy brain, this is like Christmas in July.
According to a recent Guardian article, there is an interesting trend that the rich are paying less tax than they ever have before. Through legal strategies and procedures, there are several millionaires that have even managed to pay $0 in taxes on their income, an increase again from previous years. Thousands of high-income earners learned how to pay less taxes legally, getting their reported income below the tax-free threshold of $18,200.
In another article posted by the Sydney Morning Herald, Peter Martin reported that of the 56 top earners (making an average of $2.3 million each), only 2 actually paid income tax.
Some of the interesting points to take note of are that these ultra-wealthy tax avoiders use tactics like claiming negatively-geared property, reporting losses, and establishing offshore foundations and entities. They all highly value the assistance of a tax accountant to set up structures that enable them to do this, 100% legally. We can use these high-income earners as a way to model what you should do with your own tax, also completely legal and within the parameters of the Australian tax law.
But what I want to point out is that the wealthy have a vested interest in protecting their wealth. The bottom line is that they care more than the average Australian about legally paying less taxes. But the strategies and techniques they employ aren’t exclusively for them.
“People who complain about taxes can be divided into two classes: men and women.”
They are for you too. You can take steps to protect your wealth and learn how to pay less taxes the legal way.
Or you can keep throwing money at the government, living in a fairytale land that they’re being responsible with all that money. It’s up to you.
This is the most common vehicle I choose to help people like you keep more of your money.
If you’re earning more than $400,000 as an individual in a year, do you know how much you actually get to keep?
$236,000. Ridiculous, right? They will tax you, the individual, at least 41%, one of the highest tax brackets in the entire world. In order to stop these almost criminals from taking that money, we need to create some separation between you and your money.
And this is where we start to look at trusts to help you out. If you have a discretionary family trust, high-income earners can redistribute the wealth they earn to lower tax bracket beneficiaries. This is NOT a way to defraud creditors or evade taxes. This is a legal and ethical way to reduce the taxes you owe the government and keep more of the money you earn.
You can also set up a bucket company that can receive distributed funds from a discretionary trust and get taxed at a lower rate. For example, if you left your money in a trust undistributed, it would attract the highest tax rate at 48.5%. But a bucket company, also called a holding company, only attracts 30%. So, for that $400,000 income we were talking about, you would instantly save $74,000 in this one move.
Don’t believe me? Check my math and see if I’m correct.
|Tax Rate||Tax Paid||Amount Saved|
|Discretionary Trust (undistributed)||48.5%||$194,000|
And this is based on not distributing the funds to beneficiaries to take full advantage of the tax brackets available to you.
We can also advise you on how to create “Pty Ltd” companies to act as a trustee to protect your assets from being sued and taken from you as well.
While journos will be derisive and offended about high-income people slashing their tax bill, I think it’s something we should model. Have a look at how the super-wealthy set up their tax structures, and you’ll notice that we can do the same for you. Through offshore entities and foundations, using a non-resident status of international destinations, setting up tax-efficient business structures, and valuing the assistance of a tax accountant, you can legally pay almost nothing on your tax bill as well.
For starters, all the information and power I have at my disposal to help you pay less tax means nothing if your records are unclear and incomplete. With a detailed analysis of your spending and your expenses and income, I can tailor-make a solution for you.
I can’t stress enough that detailed records are so much easier when you keep on top of it regularly. If you’re only doing it once a quarter when it's time to pay your BAS and PAYG, it’s going to overwhelm you. Once a week, download your reports, go through your logbooks, and record all your income and expenditures. There are some tools and apps that I can recommend to help you keep accurate records.
Did you know that if you had a trust set up, you could claim courses and classes and the associated expenses? Most expenses, as long as they are directly related to running your business, can be claimed on your return. That’s equipment, training, wages, rent, utilities, advertising, and many other deductions.
You’re going to need a receipt for all those expenses, however. Refer to Step 1. The ATO only gives you the benefit of the doubt for $300 worth of deductions.
“The hardest thing to understand in the world is the income tax”
Continuing the trend of creating separation between you and your money, how about as far as halfway around the world? One way we help high-income earners learn how to pay less taxes is establishing their businesses internationally to escape the truly outrageous tax rates in Australia.
Concerned about the legality of this move? With expert help and a unique path designed for you, we can show you how thousands of Australians are reducing their tax burden by doing business overseas. If you meet the very strict legal criteria, we can help establish an offshore company and foundation for you. By abiding by the Transferor Trust rules, the Central Management and Control rules, and the Controlled Foreign Company rules, we can help you drastically cut your tax bill.
This can be complicated and Australian law comes down hard on entities not doing this correctly. In a High Court decision of Bywater Investments VS Commissioner of Taxation in 2016, the Australian government cracked down on Australians operating a business overseas while controlling it from within the country.
We could even help you reduce your tax to $0. If you want to just leave it all behind, we can help you move overseas, becoming a non-resident of Australia and legally cutting your tax to nothing. If you have business clients overseas or you have significant investments and trading overseas (that meet the strict criteria we mentioned), this is an easier option that you may not have considered. A large number of our clients travel extensively for work, and the option to move overseas is not the massive upheaval you might think it would be.
This is certainly not for everyone, and we’re aware of the big financial decision it takes to move your business offshore. And if not done correctly, being completely tax compliant when we need to be, you could put your business at serious risk. Trust an Australian accountant who knows the international tax laws inside and out to advise you on the best course for your money.
The following strategies are used by individuals, but there are several more techniques and strategies related to property, business, spousal and family contributions, retirement and estate planning, self-managed super funds, and that's just locally. We haven't even broached the subject of international tax laws and ways to position your wealth using the advantages of other countries.
And who am I? I’m Warren Black, and I know both sides of the tax law, both as a lawyer/accountant as well as a business owner and an investor. I know what it’s like to make money only to have the government come up to me with their hands out for the very cash that I worked hard to make. I also know the taxation laws both locally and internationally so that I can help you keep more of your money and protect your assets.
But I’m not about defrauding the Tax Office. Although I’ve dedicated my life to helping people avoid paying taxes and keeping more of their own money, I do it through legal and ethical means. When the Panama Papers were leaked with the financial records of some of the richest people in the world, I was named and interviewed for my involvement. As you can see in this article, I was the only Australian named that was shown to have no ”illegal behaviour or wrongdoing”. All my methods are legal and compliant with Australian tax laws.
When you connect with us, I can show you how I save my clients hundreds of thousands of dollars by setting up offshore structures, advising how to properly use their family trusts and bucket companies, and even advise on becoming a non-resident of Australia to legally cut tax bills to zero. My clients are listed on the Financial Review Rich List and we can model their secrets to cut your tax bill as well.
For your free strategy session and assessment, talk to us today.