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

    • CalmLemons on 22/08/2020 - 17:26

      @BOGOF everyone should just read this guys post.

      To put everyone's mind at ease, unless you have a large overseas sister company like, Google in Ireland for example, there is no dodging tax, to relax.

      I pay more tax now than income as a graduate.

      There is nothing to be jealous of with negative gearing, as you are paying out that money to have incurred that loss in the first place.

  • tsunamisurfer on 20/08/2020 - 16:19
    +5

    Before we get the pitchforks and torches out for the high income earners of Australia.

    Let's look at the stats provided by the ATO if all tax lodgements were represented by 100 people.

    https://www.ato.gov.au/About-ATO/Research-and-statistics/In-…

    If we rank our 100 people by their taxable incomes:

    people with the top 3 taxable incomes paid 30% of all net tax
    the next 6 paid 18% of all net tax
    the next 30 paid 40% of all net tax
    the next 37 paid 12% of all net tax
    the final 24 didn't pay any tax.

    The top 9% of tax payers pay 48% of all tax.
    The bottom 61% of tax payers pay 12% of all tax.

    The spread of tax burden is absolutely disgusting.

    • brendanm on 20/08/2020 - 16:29
      -4

      But everyone tells me the rich are evil and should pay more tax, and the poor battler is the good guy?

      • jakeau on 23/08/2020 - 07:35

        It’s fake news.

    • Drakesy on 20/08/2020 - 16:43
      +23

      To be honest though, this spread is far better than in America where wealth inequality is through the roof. Although the American tax brackets are a joke with millionaires taxed at the same rate as someone earing 50k a year.

      I'd debate the use of burden as someone in the lowest tax bracket may be paying less tax, but the tax they would pay would be a greater relative burden to their lifestyle than someone say much better off in one of the higher tax brackets.

      It's all relative and yes i believe if you work hard you should profit from it. It's when there are people disadvantaged because of it where i see an issue, such as when people buy their 10th investment property, keeping 9 families out of the market while making it harder for them to get into a house which, being shelter is a basic necessity.

    • dazweeja on 20/08/2020 - 16:47
      +33

      I don't find that disgusting. That's what the system is designed to do. It's a system of wealth redistribution that's meant to benefit everyone, and I don't think that those societies that redistribute the wealth less, for example the US, are better than ours and on most measures are a lot worse.

      Is it fair that someone who trades derivatives earns ten times more than a nurse? Do they necessarily work harder or are more worthy in some way?

      • [Deactivated] on 20/08/2020 - 18:13
        -4

        It's a system of wealth redistribution that's meant to benefit everyone

        Mmmm no. It is meant to capture the largest voting block whilst still being able to generate large state revenue from income tax.

        If 60% of the people are below a certain income, it is simply a smart political move to pander heavily to these 60% and progressively screw the minority hard.

        After all, majority vote is what you need.

        It only benefits "everyone" if you consider the minority no one.

        • [Deactivated] on 25/08/2020 - 13:46

          It's mathematics. You can't tax enough money from people that don't have any. In order to tax the bottom 80% the same as the top 20% you'd need the bottom 60% to earn much more just to pay the tax bill. Tax for people on lower incomes is basically 'every free $ you have' tax for people on higher incomes is 'a small portion of the additional income required to live'….

          • [Deactivated] on 25/08/2020 - 14:12

            @[Deactivated]: I don't disagree with the math.

            I disagree with the "altruistic" implications of taxing those with more.

            It isn't to "everyone's" benefit. That is bullshit through and through.

            And the idea that someone who takes risk isn't worth more than someone who doesn't is pure envy speak.

            Anyone who thinks that taxation systems are heavily influenced by voting blocks are just too naive. It is plain fact. The left and the right argue that it is skewed against their favour but it isn't controversial that tax structures are an election tool.

      • WinstonWithAY on 21/08/2020 - 20:18
        +10

        The amount of millionaire bootlickers here is the only thing that's disgusting. I bet 90% of the people defending tax loopholes don't even make close to $1 million a year but are just hoping that when they do, which they never will, that they can exploit the same loopholes. Temporarily embarrassed millionaires.

        • Drakesy on 22/08/2020 - 11:00
          +2

          Pretty much America in a nutshell

        • jakeau on 23/08/2020 - 07:37
          -2

          Most Australian comment ever! Do well, or want to do well = condemned by your fellow man.

    • tre180 on 20/08/2020 - 16:57
      +6

      Yes, its absolutely disgusting

    • crentist on 20/08/2020 - 22:47
      +6

      The spread of tax burden is absolutely disgusting.

      Are you suggesting that the rich should pay less, and/or poor should pay more, so that it all balances?

      Because that's a pretty dumb idea given how the spread of tax is so obviously correlated with the spread of income. To the point that the the highest 1% earns as much in a fortnight as the lowest 5% receives in a year, and the highest 20% earn more than the lowest 60% combined
      You can only get so much out of the low earners, which means you can't balance tax distribution unless you flatten wealth distribution, or tax no one. Or I guess take every cent away from low earners?

      • abuch47 on 21/08/2020 - 22:02
        +1

        selfish grubs using the system to get all they can while attacking the system for others who want the same.

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

      If you look at the spread of wealth in Australia, you’ll find the poor have a far higher tax burden than the wealthy. That is what’s disgusting. It was Treasurer Joe Hockey who tried to reframe the tax debate into Lifters & Leaners, and had the ATO deliver misleading stats like your quoting with our tax assessments.
      Australian Bureau of Statistics

      • jakeau on 23/08/2020 - 07:38
        -1

        LOL! Is that before or after they’ve sucked the government teat dry?

    • menocheapsk8 on 21/08/2020 - 08:42
      +3

      Statistics like these can easily be misleading.

      37 paid 12% of tax.
      24 didn't pay any tax. Are these students working part-time of just people with good accountants ?

      Most people in the top tax brackets have worked hard and deserve their incomes, however the cost of living does not increase linearly. Someone of $80k and someone of $8M would have most of their living costs covered by say $40k. Looking at after tax earnings, less the $40k, would give you a better picture of actual burden.

      • serpserpserp on 21/08/2020 - 18:26

        cost of living does not increase linearly.

        Well it does if you keep upping your mortgage size in line with your cashflow!

      • TheBird on 22/08/2020 - 22:08

        It's been a while since I've looked at those stats, but I think you'll find that the 100 is a sample of those working. If I remember right, it doesn't include retired, minors, students etc.

        I think you'll find most of those under the tax free threshold are casual workers. Often students, unemployed getting a few shifts here and there and even the elderly.

    • abuch47 on 21/08/2020 - 22:01

      the system that heavily taxes is also the system that allows them to profit much greater than everyone while also doing the same amount of work.

      OBVIOUSLY a system that relies on the charity of the rich is a terrible system for a society.

      It is and always has been a balance between equality of opportunity and equality of outcome.

    • j24bauer on 22/08/2020 - 13:46
      +1

      Income tax only. therefore completely useless statistic.

    • jakeau on 23/08/2020 - 07:36

      The top 9% of tax payers pay 48% of all tax.
      The bottom 61% of tax payers pay 12% of all tax.

      It’s very sad.

      • Sxio on 23/08/2020 - 18:03
        +2

        Honestly, I don't think it's that sad. We (My wife and I) are in the high income tax bracket. Just. But all of my life until the last 10 years, I was in the lowest tax bracket.

        Now that I'm… kinda? wealthy? (I really don't feel rich but I do have a house, an investment property, 2 late model cars so I'm doing ok)… It makes sense that I pay more. It's the system designed to help the most people. Taxing high income earners less and low income earners doesn't make any sense. How are the low and middle classes supposed to get ahead if they're being bled dry with tax? Sure I don't love paying lots of tax, but I do like hospitals and roads. And I definitely used a lot of services back when I had nothing. I'd much prefer that than the american system.

    • [Deactivated] on 25/08/2020 - 04:05

      Absolutely the top earners pay the biggest portion of tax, if it were spread evenly most people would be on negative income…. :o

      One of the main equity issues with the tax system is that the way spending and the tax system works it's much easier to pay a lower average rate of tax on earnings as you move up the scale. The top earners are actually not even necessarily the top tax payers as you can avoid recognizing your earnings as income if you don't need access to the money.

      The other end of it is that the poorest have the least to lose from a total break down in government…. If you're already struggling to live descending into chaotic anarchy is a lot less of a fall…. You get more benefits from taxation if you have more wealth. Even the value in having consumers for your business with money to spend can't be overlooked.

  • [Deactivated] on 20/08/2020 - 16:41

    73 out of 25,000,000 anit bad

  • kanmen on 20/08/2020 - 17:39
    +5

    I think business related expenses is a big one. Buy a porsche for your 'company'

    • BOGOF on 20/08/2020 - 17:47
      +2

      Lease a Porsche for your 'company'…better for cash flow

    • lubos on 20/08/2020 - 19:07

      There is luxury car threshhold. Buying $250k porsche for your company will give you about the same tax deductions as buying a $60k Toyota. So you are not really decreasing your tax liability by buying luxury vehicle.

      • O K on 21/08/2020 - 11:12
        +1

        But you’d still be driving around in a $250k porsche. I know what I’d be buying

        • lubos on 21/08/2020 - 12:05
          +2

          If you can afford it, do whatever you want. I'm just saying buying expensive vehicle won't lower your tax bill which is what is this topic about.

          • serpserpserp on 21/08/2020 - 18:27
            +2

            @lubos: It is funny how people seem to equate "buying a Porsche for your company" to it being for free somehow.

            • jakeau on 23/08/2020 - 07:40
              +1

              @serpserpserp: Yes, they’re the ones who couldn’t balance a household budget and invariably cry poor.

  • DarthAntz on 20/08/2020 - 18:12
    +2

    art and running your own charity tied to/linked to your company. I think its a smart combination of all of the answers above. I'm sure once youve done it for a few years it gets much easier to focus your income and expenses on paying little to no tax at all.

  • drprox on 20/08/2020 - 20:44
    +2

    Run a business, buy some vehicles for instant asset write off.

    • serpserpserp on 21/08/2020 - 18:28
      -3

      Shame you have to have signage on your car though.

      • jaimex2 on 22/08/2020 - 22:34

        Magnets

        • serpserpserp on 23/08/2020 - 08:46

          I thought that isn't allowed?

      • eek on 24/08/2020 - 09:16

        Lots of people with their leased "100% business use" cars driving their kids to school and back, getting groceries, etc. With zero signage. It's not needed. Nobody checks.

  • Boshait on 21/08/2020 - 07:24

    Be assessed as a trader and make large losses?

  • jacross on 21/08/2020 - 08:08
    +1

    From the article, charitable/deductible giving appears to be a big part of it.

  • OzHunterNSW on 21/08/2020 - 11:40

    They own businesses where it is the business that is the table entity which they write down each year to reflect a zero profit

  • afah0447 on 21/08/2020 - 12:39
    -1
    • Make donations to the Liberal Party.
    • Set up a family trust.
    • Use profit shifting to ensure I pay a lower tax rate in a different jurisdiction.
    • Claim all personal expenses as business expenses. Including claiming my mortgage is a travel expense.
    • IMadeYouReadThis on 21/08/2020 - 15:08

      Set up a family trust.

      This ^

      They should ban this in Australia.

      • od810 on 21/08/2020 - 17:03

        No they don't need to be banned, because they have legitimate use for estate planning. But you can do something around distribution, like minimum distribution amount per beneficiary.

        • kiitos on 22/08/2020 - 10:02

          What do you mean by doing something around the minimum distribution amount?

          • Charybdia on 22/08/2020 - 14:14
            +1

            @kiitos: Mandating a minimum amount that each beneficiary should receive where the trust has a distributable surplus at the end of each financial year. Essentially, this is trying to limit income streaming.

    • serpserpserp on 21/08/2020 - 18:29

      Including claiming my mortgage is a travel expense.

      Lost me there.

      • Drakesy on 24/08/2020 - 13:02

        I think they were alluding to what politicians have been doing with their investment properties by charging the taxpayer their travel allowance for every night spent in the capital for ministerial work, doesn't matter that they own their accommodation, just as long as it's not their primary place of residence. It's a loophole that's many pollies have been using and are finally getting pinged for.

        Although this may work for private if your investment property is an airbnb and you're 'staying' at it.

    • arcticmonkey on 22/08/2020 - 05:16

      Is that the ticket to social welfare for the rich?

  • Freitag on 21/08/2020 - 14:44
    +1

    If you're a millionaire you probably don't need to work for a salary, and you might structure your investments to be tax efficient.

    A simple example could be Tesla shares don't pay a dividend so you only get taxed if you sell at a profit. They would probably use more complicated means, by investing through a company or trust, so the company or trust may be taxed but not themselves. Any investment although it grows in value doesn't need to turn a taxable profit.

    • trapper on 21/08/2020 - 16:06

      Then you can take a loan against it and invest that borrowed money too - and now you have a tax deduction against the interest!

      • lubos on 21/08/2020 - 18:19

        Yes, you get tax deduction but you forgot the part where your company will have to pay corporate tax on the interest it has earned from you. So you pay less tax, your company pays more tax.

        • trapper on 21/08/2020 - 18:39

          What, if you own the bank too? lol

      • mungas on 22/08/2020 - 21:52

        This is actually wrong. If the company you’re investing in has no intentions in generating revenue (dividends), then the interest on the loan is NOT DEDUCTIBLE, regardless of whether you believe you will sell at a profit, unless you are a share trader who treats your trading on revenue.

    • dtc on 21/08/2020 - 16:52
      +2

      while this is generally correct, it doesnt explain the example under question. The example is people who had an income of $1m. If the money is retained in a company or you buy a share that increases in capital value, none of that is income for the individual.

      • trapper on 21/08/2020 - 18:50

        As an example.

        If you borrow money to buy investments the interest on those loans is tax deductible. If those loans are big enough it could offset your entire income.

        Meanwhile after a few years your investments are worth 50x what you paid for them yet still no tax due because you haven't sold anything.

        You can even use the increased value of those investments to leverage more loans to buy more investments.

        • aa on 21/08/2020 - 19:48
          +1

          this is interesting, however as you are always borrowing, you must also be earning money on your investments, however like you said, you will never be able to 'cash out' or enjoy this income, technically speaking, you can't use your investment company to buy a house, or holiday house or car to enjoy yourself. at the end of the day, if you wanted to become wealthy, you would still need to pay tax, say you don't own a property, or in the process of paying it off (and want to pay it off), even if you were on a relatively high salary (say 200k), regardless if you were a employee, sole trader, own a pty ltd and pay yourself fully franked divideneds, by the time it reaches your bank account for you to spend personally, you would have been taxed the same amount more or less.

          Distributing it through a trust is probably the only ways to reduce your income, but you will also need family members/trusted individuals on relatively low income to benefit.

          • trapper on 21/08/2020 - 21:00

            @aa: Billionaires don't just have those billions sitting as cash in their bank account, it's almost all invested.

            They draw out a couple mill here and there (and pay the tax on that) to fund their lavish lifestyle but it's a tiny fraction of their 'income'.

            • aa on 21/08/2020 - 22:19

              @trapper: yes true, but at the end of the day we all pay tax, there's no getting away with it :)

              • arcticmonkey on 22/08/2020 - 05:18

                @aa: You're misled if you think that. The peasants like us pay, many others don't.

                • aa on 22/08/2020 - 11:45
                  +1

                  @arcticmonkey: I would have to disagree here though, i think the tax system is quite robust, i mean as a peasant who dreams of becoming a millionaire (and who wants to enjoy such a status) would need to work exceptionally hard to get there, no doubt about that :)

                  However, in order to enjoy such a status, let's say nice house, car, expensive holidays etc, all this needs to be paid for using after tax dollars right? which means tax would be paid one way or another. Lets say your company pays for all these things, you will be slugged with FBT (which your company pays for you), but at the end of the day, without doing any intricate calculations, you would have paid about the same amount of tax through the company and your personal income taxes compared to had you just taken the same amount as salary, paid tax and purchased it with after tax dollars?

                  Given these millionaires are spending large amounts on handling 'tax affairs', as someone else pointed out, they are just passing the tax obligations to someone else, but at the end of the day, someone will be paying this tax, unless you send it off shore, but now lets say you take this off shore money and want to purchase property here in Aus, this would likely be taxed as well when the money comes back on shore.

                  For these people, they would have to have already owned their 'forever house' and have enough assets to reduce their income to align with their 'deductions', otherwise they would never be able to personally enjoy their wealth right? To get to that stage they would have paid a sizeable share of income tax already as they worked their way up the ladder. The only group of people i can see who don't really ever pay tax is someone who has inherited a large estate, and don't need much income to survive as they already have everything, and this is assuming they haven't inherited any income producing assets (other than their PPOR of course), their parents or person who gave them the inheritance would have of course paid tax on the income necessary to purchase those items, but in the case of a PPOR, which isn't taxed, holding onto such property for such a long time would likely have resulted in significant wealth creation tax free, which is what every negative gearer out there is trying to do.

                  There is of course also tax incentives available to companies in all shapes and forms (think mining, film industry etc), although the Government has determined such offsets will increase the economy, but i guess only the well connected are able to take advantage of such things.

                  • trapper on 22/08/2020 - 13:30
                    +2

                    @aa: 'we all pay tax' is missing the point. Which was about the amount of tax we pay.

                    • aa on 22/08/2020 - 14:21
                      +1

                      @trapper: but that's what i'm saying, in order to get the $ into our bank accounts for us to spend however way we wish, we would have paid the same amount of tax, whether or not that is as income tax, a combined income tax and company tax (with franking credits), or kicking the can down the road.

                      Those that don't pay tax have either given away their money to the benefit of others, or are creating wealth on paper that they can't spend on themselves - so what's the point?

                      Even if you leverage equity and borrow on your assets to enjoy your spoils, you are still spending more money (interest), and if you were to make this deductable, i.e say we buy a guy with a company loan, the car will attract FBT which the company pays, which really makes it no different to paying yourself a salary and buying it outright anyway - without doing the maths, i would say the savings if any would be minimal.

                      Using @SAINTx0110's example of artificially inflating a piece of art then using this as a deduction when donating it, theoretically you would need to pay CGT on that artificial inflation anyway, so really $0 income tax on paper is either passing on that tax obligation to another entity, or kicking it down the road.

                      Say i was Billionaire James Packer and wanted to buy that $60m penthouse, I would need to liquidate roughly $110m in shares, pay my 45% tax in order to come up with the cash to pay for the property right? Of course i could offset this with investment losses on my personal income from say other property or shares, but that would mean i would have actually lost that money in the past some time. If i purchased this through a company, i legally wouldn't be able to live it it without paying rent or FBT as it's not a arms length transaction.

                      • lubos on 22/08/2020 - 16:52

                        @aa: Techically speaking, James Packer would get 50% CGT discount. Although he would still end up paying $20M in tax to buy $60M penthouse. There is no way around that. You can defer your tax bill by using debt which I'm sure many wealthy people do but sooner or later debt will have to be repaid, income will need to be declared and tax paid.

                      • trapper on 24/08/2020 - 10:20

                        @aa: Packer would probably buy that house with a loan. Interest rate will be far lower than what his shares are earning so makes no sense to sell shares to buy the house.

                        Also if you do want to get cash out to spend then you can sell off badly performing investments too and offset that loss against the gain from selling some good ones. Net gain is zero, but still millions into your bank account tax free.

                        • dtc on 24/08/2020 - 10:37
                          +1

                          @trapper: Also if you do want to get cash out to spend then you can sell off badly performing investments too and offset that loss against the gain from selling some good ones. Net gain is zero, but still millions into your bank account tax free.

                          This doesnt work. If I make $1m in capital gains, then to avoid paying tax on that I need to make $1m in capital losses. Net gain is that I didnt make any net gain. All that happens is the money I initially had and put into an investment has now been returned to me.

                          Yes I may have borrowed to invest, but I now need to repay that loan, so again I only end up with the same amount of money as I started with.

                          And in any case, as per my original comment, making an unrealised capital gain is not income. So the original article (people had incomes of over $1m but paid no tax) doesnt apply to this situation - because unrealised capital gain is not income.

                          When you do cash out, it is income. If you invested through a company you may have franking credits, meaning you as an individual may not pay any tax (depending on your other income), but the company has already paid 30% so its not 'tax free' money. Its been taxed on the way through

                          • trapper on 24/08/2020 - 11:48

                            @dtc:

                            This doesnt work. If I make $1m in capital gains, then to avoid paying tax on that I need to make $1m in capital losses.

                            Only if you sell that investment. There is no 'free', there is just manipulating things to get the best outcome.

                            Offsetting a loss against a gain is just one example of this, it doesn't mean you make the loss on purpose.

                        • [Deactivated] on 25/08/2020 - 13:49

                          @trapper:

                          Packer would probably buy that house with a loan. Interest rate will be far lower than what his shares are earning so makes no sense to sell shares to buy the house.

                          This is dumb. Because the interest on that loan wouldn't be deductible. You'd be better off buying the house with the cash and taking out a loan to buy the shares, then you can deduct the interest on the loan.

    • serpserpserp on 21/08/2020 - 18:38

      Beneficiaries of distributions get money less tax paid by the trust. So tax is still paid if you are the UBO and also a recipient of a distribution.

      However where it helps is that if you are the primary bread winner and have a family of a partner and 3 kids (adults) that don't work. Then you can distribute to them at a lower tax rate and then it is the "family's money".

      • No ONE on 22/08/2020 - 01:28

        Trust does not pay tax, all of it is distributed to beneficiary. Only time trust pay tax if retained earnings is not distributed to beneficiary by the financial year end.

  • OzzyOzbourne on 21/08/2020 - 15:57

    It cost $5 million to manage my tax affairs and the ATO said no worries mate

  • niknah on 21/08/2020 - 18:59
    +4

    Most people here are presuming they're doing this consistently. It could be people having a once off big loss. Some of these people may pay a lot of tax in previous / future years.

    • No ONE on 22/08/2020 - 10:22

      You are actually presuming a one-off. One-offs are usually capital gains/capital loss.
      Unless you are day trader, then they are not one-off.

  • fersea on 21/08/2020 - 20:24

    My expectation is they are mainly primary producers who have accumulated tax losses. If you have been losing money say due to a drought, then suddenly have a good year, those tax losses offset the income in the good year hence the reason you don’t pay tax.

    Perfectly legal and in my opinion not unreasonable.

    • greatlamp on 21/08/2020 - 22:52
      +1

      And while we focus on this non issue, mining companies are using this same mechanism to declare no tax in Australia and sell the raw materials to foreign subsidiaries

    • nephilim on 22/08/2020 - 01:02
      +1

      Watched a video on YouTube about this, interesting they claim home repayments, expansion of land (Again repayments) and rental of land as expenses.
      Not surprising many just break even or make a small loss, while building wealth.
      I need to get 10 cows, and claim my home loan against the ATO Then use that money to fight against the council fines for owning cows.

      • kiitos on 22/08/2020 - 10:11

        I guess claiming home repayments is fair enough assuming the home means the entire property which is income producing, and then they'd be liable for cgt if they sell.

  • localhost on 21/08/2020 - 20:29
    -1

    I think if you are in that income bracket you will know how to reduce your tax :)

    Most successful way: charity.

    Make an organization under your wife's name and pay charity 90% of your income.

    • Wallyt99 on 22/08/2020 - 00:44
      +1

      Do you need to change your wife's name to Charity?

    • AustriaBargain on 22/08/2020 - 02:51

      Or invest 100% of your own profits back into your business or some other investment. Pretty risky though, just to avoid tax, unless you invest in something really safe.

  • AustriaBargain on 22/08/2020 - 02:50
    +2

    There’s only 15,000 millionaires in Australia? Sometimes I wish polygamy was the norm, it’s unfair that only one partner can mooch off them at a time.

    • Trying2SaveABuck on 22/08/2020 - 19:45

      Well unless both parties in the relationship are millionaires? Most of the rich ppl i know married someone who also is wealthy (or at least comes from a wealthy family)

      The only cases of that not being true is if it is an old guy married to a young girl from Asia ie he is 50 she is 28….

      • AustriaBargain on 22/08/2020 - 20:26
        -1

        That's even worse if they are only dating each other. There should be government funded policy that rewards rich people for marrying poor people, and punishes them from marrying each other. And there should be a ten million dollar per year subsidy for being married to me.

      • [Deactivated] on 24/08/2020 - 11:20

        There's a couple in my parents street who are both billionaires in their own right. She's a lot richer than him though.

  • SAINTx0110 on 22/08/2020 - 09:15
    +3

    Saying that they pay $0 tax is a bit disingenuous. To get your tax to zero takes more than negative gearing and tax deductions. It takes clever accounting to move money in such a way to where it's not earned in Australia, or to inflate the value of charitable donations. As a result, they end up paying tax in another country, as well as some fees to the Australian government for the privilege of moving the money. It just so happens that when you earn enough, that ends up cheaper than paying tax.
    I'm not too familiar with individual tax minimisation strategies, but one method is to artificially inflate the price of a piece of art that you essentially buy off yourself for more than you paid for it, then donate it to a museum. It shows up as a multi-million dollar charitable donation, even though you essentially paid (relatively) little for it. There are other strategies involving residency in Monaco too if you have the tens of millions of dollars to become a resident there. Unless you're earning a lot of money though, there's no way you'll break even. You might as well just pay tax.
    Corporate tax minimising is interesting. The famous strategy is the Double Irish Dutch method where you essentially transfer all of your intellectual property to a Bermuda shell corporation which you pay royalties to use that "company's" IP. That means you earn $0 in whatever countries you operate, and everything in Bermuda. From there you just have to licence that intellectual property in a particular way through Ireland and the Netherlands based on some weird tax laws they have. The problem with trying to patch these "loopholes" is that they aren't actually loopholes. They exist to facilitate legitimate business, so they're never going away.
    There's an Australian YouTuber called Economics Explained that, surprise surprise, explains the economics of this sort of thing really well in a few videos.

    • Trying2SaveABuck on 22/08/2020 - 19:49

      Monaco is a massive tax haven just dont buy a scotch and coke at a bar it will set you back a good 50-60 Euro a hit

      Loads of Athletes use it as a tax haven ie Novak Djokovic.

      The truth is the best way to get 'rich' people to pay more tax is lower the amount of tax they need to pay…

  • Trying2SaveABuck on 22/08/2020 - 19:22

    You can easily bring in a million dollars but make a loss on your total income

    The only main way you can avoid tax is if you get paid cash otherwise you need to be losing money somewhere to cover the money you are making somewhere else…People dont realise those who are making loads of cash (but not paying much tax) are also taking on more risk/debt to avoid tax ie leasing cars, investing in new businesses, investing in a new property, bigger loans, shares with franked dividends or loans for shares etc

    The tax laws are the same for everyone - there are some 'international companies' that do use other nations as a tax haven but that is more our (or our governments) fault for letting that happen ie Apple, Google etc

    However Family trusts i hear are a good way to avoid tax but im no expert i pay my fair share like the sucker i am

    I have argued for a long time taxes in Australia are far too high and the money the tax payers put in isnt worth what we get out of our governments labor or liberal, state or federal. Our MPs are the best paid in the world for the number of people they govern and they have done a poor job for over 2 decades now…

    Here is a small list of outdated or counter productive taxes (feel free to add to the list) - Stamp duty, Luxury car tax, GST, land tax, fuel tax, medicare levy surcharge…..

    • kiitos on 23/08/2020 - 09:40
      +1

      Why do you say GST is outdated or counterproductive?

    • bargainparker on 25/09/2021 - 13:48

      There is a time when the government changes their departments' names. Throwing your money down the toilet. Nobody cares.

  • peanut48 on 22/08/2020 - 21:17

    I’m wondering the same about people who make same or less income than me but paying way less tax than I am and driving expensive cars that would give them major tax breaks/benefits because they have a ‘company’ ABN. I don’t even understand it while I’m feeling like a sucker for having a straight laced PAYG job.

  • 91rs on 22/08/2020 - 22:25
    -1

    Have kids, govt handouts to parents make a large percentage* of them tax neutral with the taxpayer money they're getting offsetting the amount of tax they do pay.

    *NATSEM 2016 - 48% of Australia’s 12.2 million “income units” pay no net tax.
    Any tax they do contribute is offset by the welfare — pensions, family tax benefits or childcare rebates — they receive

  • TheBird on 22/08/2020 - 22:30
    +3

    It's easy. Become a stripper. Change your name to Charity. Decuct all your donations to yourself. #UltimateLoophole

  • [Deactivated] on 22/08/2020 - 23:01
    +1

    It's really sad when you're earning much, much more than you need but you still try to avoid tax when people earning regular income pay what is required of them.

    • Trying2SaveABuck on 22/08/2020 - 23:48
      +1

      It isnt sad at all the system is geared against those who try to work hard and accumulate wealth

      The tax system in Australia has become incredibility corrupt and socialist - the one who pay the most tax (not necessarily rich however high income earners) often get the lease benefit from the system …

      Corrupt - becuz Politicians get a garenteed pension when the retire regardless of how 'rich they are' it is a non-means tested pension over over 100k a year

      Socialist - if you have saved over >240k this will reduced your eligibility to the aged pension, potentially ruling you out of the system all together despite the fact you might have paid your fair share of tax your whole life - Not being eligible for the aged pension also rules you out of getting a healthcare card which means you have paid taxes ur whole life to fund all the people leeching off the system and you have to pay full price for medications that the leeches get for a few dollars….

      I dont blame anyone for not paying tax becuz the system shafts honest tax payers in the end - i work with a bunch of 'retired' people. The ones that have worked hard, invested and paid LOADS of tax in there life are the most bitter about the way the system treats them and to be fair they have a point.

      essentially the government wants you to be honest and pay your fair share of tax until it is the politicians turn to pay tax and not milk the system….the system is broken

      • [Deactivated] on 23/08/2020 - 09:22
        +1

        Work hard? More like most of them are born into wealth and get positions out of nepotism. Besides the people who work hard to get wealthy often get their wealth from other people. Take a specialist doctor for example, they earn $100+ for 5-10 minutes of work. Yeah I know they worked hard and invested time and whatever but when you go into med, you're almost guaranteed a high paying job, it's a safe investment and generally safe investments don't yield high returns but boy does this one do. But you look at people who are doctors, most of them had private education for most of their whole lives. People who become wealthy from investment typically was able to access huge amounts of money to begin with. So the system naturally is rigged against poor people. Why should that surgeon pay as much tax as some factory worker when their just simply charging what they want and earning much more than they could ever need?
        I'm not an economist but isn't accumulating wealth a bad thing for society? The money just sits in one place for 50 years and doesn't get used because well, they have too much of it. Isn't it better to give some to people who need it so they can spend it to feed someone else?

        Yes the system is corrupt because rich people can avoid tax and pay nothing but still get access to the defense force. Politicians getting a guaranteed pension I agree, that's corrupt. If people paid their taxes, the system would have more money so we could invest in stuff like science, healthcare and building better communities than rich people just holding onto it. Some people live on 30-40k a year there's really no excuse to not pay your taxes, especially when you're earning 200, 300, 400k, 1M+. Money should go around in a circle, not a linear path where it stops at one person and sit there so when it does, it should be taxed higher and that's typically at the 180k mark I'm guessing. I can't believe the types of people you're defending here.

        • Trying2SaveABuck on 23/08/2020 - 09:55

          The argument swings both ways 'poor people' rip off the system too

          I talk to ppl who rent Rich but are comfortable 'middle class' and they biggest complaint they have is why do bludgers/junkies/illegal immigrants etc - given free housing, free money, free services, etc (i even know a couple who came here on a temp protection visa getting free IVF govt paid 1000s for non Australians to have a baby).

          Regular tax payers and rich people say how is that fair? when i have had to work for it all my whole live taken very little from the system and i see people who have basically sponged off it there whole life and are given public housing in williamstown…

          The system is broken i agree the 'mega' rich do rip the system NO ONE MORE THEN POLITICIANS (it is why the system will never change). But i know people ripping the system off on the bottom end of the spectrum as well that tax payers are funding….

          Personally and i think most people defending the rich would rather live in a system where you keep what you get your taxes only go to services that help everyone directly ie no politician pensions, no illegal migration, no giving money to other countries that hate us anyway etc

          In Summery the reason why most of us 'rich' ppl dont want to pay tax is we dont feel the tax money is being used effectively and we dont feel the money is being distributed fairly.

          Someone said b4 the top 10-20% in Aus pay about 60% of all the tax where the bottom 60% pay like 12% - but the top will essentially get very little back for there tax dollars where the bottom milk the benefit.

          • [Deactivated] on 23/08/2020 - 10:26
            +1

            @Trying2SaveABuck:

            In Summery the reason why most of us 'rich' ppl dont want to pay tax is we dont feel the tax money is being used effectively and we dont feel the money is being distributed fairly.

            Oh yeah I'm sure that's it isn't, the Donald Trump geniuses of the world avoid tax only because the government doesn't use it effectively. What a load of crap.

            Personally and i think most people defending the rich would rather live in a system where you keep what you get your taxes only go to services that help everyone directly ie no politician pensions, no illegal migration, no giving money to other countries that hate us anyway etc

            We fund illegal immigration? We don't give money to countries simply because were alturistic, it's because it can benefit us too. By funding the development of countries, to help fight diseases and defend their land, we gain allies whilst we avoid the disease ourselves. Besides, even if we didn't get anything from it and they hate us, depending on the situation, I wouldn't want them to starve either way.

            Someone said b4 the top 10-20% in Aus pay about 60% of all the tax where the bottom 60% pay like 12%

            That's because the top 20% own 60% of the wealth.

            The system is broken i agree the 'mega' rich do rip the system NO ONE MORE THEN POLITICIANS (it is why the system will never change).

            I love this mindset, like a child who screams 'BUT HE GOT TO DO IT'. Government pensions will be paid regardless of whether you pay your taxes or not, they're already there. This is your sole excuse to NOT pay taxes? You want to sink to as low as politicians? Hell, there could be an argument that people in politics could be earning more otherwise so it's just an incentive like salary packaging for certain public workers. I'd rather these people pay their fair share of taxes and if they don't have enough, they're welcome to go on the age pension.

            The argument swings both ways 'poor people' rip off the system too

            Yeah because people getting 15k from Centrelink is the same as someone forgoing 400k in taxes. Get real, people at the bottom end just aren't given enough resources to crawl out of the hole their in some of the time. But bring some statistics, an overwhelmingly majority of people don't. Whereas the ATO data for surgeons say their average salary is 300k?

            As you said before, why should people be punished for accumulating wealth? Because they're holding onto money they earned from the common people. You think they just made extra money? No there's a fixed amount and they take more from people and hold onto it. As they keep accumulating wealth, people at the bottom have less money to spend and that's bad. But let's say we don't give these people more money, funding schools, science and research is still better than those rich people holding onto their money. Stop acting like they deserve every penny they earn, they work hard to take away from the common people. Buy as much rental properties as you can so then people who can't afford to buy one has to rent and essentially working for you but by your definition these people worked so hard for their money didn't they renting out something that was already there to avoid paying taxes because by your reasoning, why should anyone pay taxes.

            • Pete10001 on 23/08/2020 - 12:45

              @[Deactivated]: One of the biggest problems is the disparity in incomes between various jobs and professions. While for instance most teachers don't do badly, their hourly income is paltry when compared to say dentists and some tradies such as plumbers, mechanics etc. My (experienced) teacher buddy earns less in a day than my dentist earns in 3/4 of an hour. There should be less barriers to entry into fields such as dentistry, so that there's more competition, which should lower prices. Perhaps if private health insurance didn't exist, then prices would also be more competitive.

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