150K Question - Financial/Accounting Advice

L[Deactivated] on 24/03/2015 - 23:20
Last edited 25/03/2015 - 07:49

Hello fellow OZ Bargainers, I am a regular visitor of the website and have finally decided to sign up. Most of the guys/girls here are great and often awesome deals are posted that are then hotly debated which is refreshing and amusing sometimes even more than then deal itself.

Anyway, I need some advice regarding some financial matters and I thought Oz bargain will be the best place to seek advice when it comes to saving money (Only to spend on some sweet deals later on)
My situation is as below

I am a full time IT professional and earn a half decent wage and pay my fair share of taxes(no issues so far, all fine and dandy)

My brother who lives overseas runs an on line business serving customers in Australia, UK, America, Canada etc. so far so good.

Potential issues start when all his monies from his Australian and other foreign customers come in my account which are generally large sums of money between 5K-20K and sometimes more a month. for last couple of years its been going over 150K per annum.

which I send to his overseas account on regular basis. Have full record of all monies sent overseas in last 3+ years. My concern is can Tax man come and ask me about where the money is coming from and why I am not declaring it? It is not my money, even though it is in my account and is sent to the rightful owner on regular basis.

My brother is not an Australian citizen/resident, he hasn't even been here, so cant open a bank account under his own name. what are my options for helping him continue his business and comply with the law too.

I have thought about forming a partnership of 10% my share and 90% his so we can pay tax on my share but I think it might be unfair, he does all the work, only thing I do for him is to let him use my account number for accepting payments.

Or a simple statutory declaration will do the trick when the tax man come knocking "that this business is operated by my brother, and he is using my account to accept his payments because he does not have the options to open paypal account, or any way of accepting international payments in his country as the options are extremely limited."

Please be kind and advise :)

thank you all.
Regards

Kashman

thank you all

the concerns about Money laundering and TAX fraud scenarios have crossed my mind, would speaking to ATO regarding this raise any red flags?
if my brother agrees to have his business registered under my name and pay taxes, how can we minimize taxable income, his and mine combined will easily go around 350K plus. which i would not like to have all under my name.
if any accountants are here please pm me for a one on on in detail discussion.

Financial

closed Comments

  • Logical on 25/03/2015 - 00:33

    are you sharing your bank account, that is, your money is also in that account? I would open a separate bank account so that money coming in for him would be transferred in full to him, leaving a zero balance.

  • inherentchoice on 25/03/2015 - 05:17

    Perhaps you can keep the arrangement going but declare it all as both income and a tax deduction. Therefore it's been declared but you don't pay any taxes on it, and it doesn't add to your taxable income (i.e. assessable income minus allowable deductions).

    I honestly have no idea though and I am not qualified to answer this $150k question. You probably need the ATO or an expert to confirm if this is an appropriate solution.

    Ask your brother to pay for professional advice on the appropriate way to receive his income.

    • dasher86 on 25/03/2015 - 06:56
      +1

      This will still increase his higher residual income and may make him not qualify for other benefits which he may otherwise receive.

  • Sshanaz on 25/03/2015 - 06:40
    +8

    It sounds to be perfect example of layering stage of money laundering where you are accepting money from third parties and then sending it to the same reveiver (ultimate beneficial owner). You are assisting brother to disguise the true origin of funds.

    Based on 7 year experience in Compliance, I can safely say that you have already been reported by your bank time and again to AUSTRAC as ML concern.

    Apart from speaking with ATO, I will recommend to take initiative and speak with your bank to clear your position on money transfers otherwise you never know when AFP is coming for investigation.

    • gevidian on 25/03/2015 - 06:59

      Great comment. I was a about to state similarly on tax fraud and money laundering concerns.

    • [Deactivated] on 25/03/2015 - 08:15

      Hi Sshanaz,
      i tried to send you PM, but i have restriction on my account "less than a day old - ozbargain newborn lol"
      Can you please PM me if possible, thanks heaps.

  • vikvance on 25/03/2015 - 08:37
    +4

    if any accountants are here please pm me for a one on on in detail discussion.

    You should seek professional advice from a tax accountant.

    "Free advice can be the most expensive advice".

    • Hadoop on 25/03/2015 - 09:49

      Fully agree.

      • [Deactivated] on 25/03/2015 - 10:07

        I am happy to pay for a consultation, i have seen couple of accountants in the past but their advice has been very generic. Must find a good one.
        Please feel free to recommend one in Melbourne if you know any.
        Thanks.

  • mskeggs on 25/03/2015 - 10:10
    +3

    If your brother is carrying on business in Australia, which the ATO would likely say he is, because he is receiving substantial cash payments locally, then he is likely to have some tax obligations here, even if he has never set foot in the place.
    Probably the way to set this up, from my layman's perspective, is to register a local company to carry out the trade in Australia, that pays a substantial license fee to the overseas operation. This is the way Google/Apple get away with paying almost no tax in Australia.
    If you told this story to a local accountant, they could likely advise the best course. If you are acting locally for him, it might also allow you to claim some tax deductions against your total income if you incur expenses such as the time taken to see accountants, provide local address/mailing facilities and any other local tasks you are performing.
    I would be cautious about letting the existing arrangement continue, as you could find yourself liable, even though you were just assisting your brother.

    Of course, depending on the nature of the business, it might just be simpler to limit his customer's payment to Credit Card/paypal to his international account. It could then be readily argued he isn't a local business.

  • tooblue on 25/03/2015 - 10:29

    … only thing I do for him is to let him use my account number for accepting payments.

    All mules say the same thing.

    • [Deactivated] on 25/03/2015 - 10:47

      Thanks for implying that tooblue. If you are in Melbourne or sydney and run a business its highly likely you have been his customer.

      • Baysew on 25/03/2015 - 11:38
        +6

        Who is he ? Ronald McDonald ?

Login or Join to leave a comment
Login Join