# Tax ideas!



## Sir Burr (12 May 2006)

Hi,

Getting close to THAT time again   

I'm not looking for any detailed tax advice. Just some idea or a good link on this stuff!   

I will see my accountant but would like to know how other people organise their tax here in advance so that I can discuss it with at least a little knowledge.

Basically I have my trading account in my wifes name as she earns 1/2 of what I make. We are both PAYE and having good returns this tax year, it will push her into the higher tax bracket.

Currently I re-invest all profits back into my capital and don't see that changing for a long time.

I think (know very little about this) that some options are Trusts, creating a company or superanuation. We already have super through the places we work so I guess a Trust or a Company could be used to save some tax????

Has anyone setup either of these that could say if it's a good idea or if one is better than the other.

SB


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## tech/a (12 May 2006)

Many underestimate or completely ignore the single biggest threat to Trading Profits---TAX!!

I have a Plastic draw box and every single reciept I can justify as a trading expense,goes in there.It never ceases to amaze me what I spend on Data,Books,Software,Mags,Paper,Computers,Inks,Newsletters,Brokers,Stationary---the list goes on.They want my tax well I want my deductions---simple but youd be suprised what you lose and dont/cant claim.

Holding longterm has a 20% tax advantage.
Takes the cream of some 50%+ runners of recient times---hold em and most have retraced more than the tax!!

There is Super ofcourse but I dont even trade in my SMSF with excess funds,(Do trade capital from managed funds now in my own super,purely because I cant get it out!)

WHY?
Cant leverage thats worth more than the tax deductions---well to me anyway.


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## ctp6360 (12 May 2006)

I totally agree with you tech/a. I have always seen paying tax as something that is unavoidable, so you might as well accept it and just earn more money. That is my policy with my businesses and with my personal income.

Why fret or put yourself intentially in a negative financial position, or at risk with the law, just to save a few thousand on tax? You're better to work that bit harder, spend that bit of extra time researching a trade and just earn more money. Sure, I may only get 55% of the money I earn (since the budget), but I'd rather that be 55% of a LOT than 52% (or whatever my efforts get me) of less.


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## GreatPig (12 May 2006)

ctp6360 said:
			
		

> just to save a few thousand on tax



Not very pleasant though when the tax bill is a few tens of thousands, or even a few hundred thousand.

The income side of the equation is very nice of course, but taking the price of a decent house in some areas and just handing it over to the ATO wrenches at the stomach .

GP


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## ctp6360 (12 May 2006)

GP I was just trying to make myself feel better, I know what you mean about the house thing! I hope everyone enjoys their roads/welfare!


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## krisbarry (12 May 2006)

Tax is the privilege you pay for taking a risk that pays off.....

Tax is the privilege of having employment 

Tax is the privilege of owning your own home

Tax is the privilege of driving your own car


....and so on


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## tech/a (12 May 2006)

GreatPig said:
			
		

> Not very pleasant though when the tax bill is a few tens of thousands, or even a few hundred thousand.
> 
> The income side of the equation is very nice of course, but taking the price of a decent house in some areas and just handing it over to the ATO wrenches at the stomach .
> 
> GP





Yeh.

Those that outperform are rewarded by our governments by having to pay massive taxes.
Not only that but if your late you'll be crucified further for that over performance.


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## bullmarket (12 May 2006)

Hi Sir Burr

I totally agree with you in trying to minimise your tax - legally of course   

As probably the best and most successful business man we have ever had, Kerry Packer, once said in response to a question that he believed he shouldn't have to pay 1 extra cent in tax that he didn't have to since the gov't wasn't very good at spending it   ........:iagree: 100%   

In reply to your question I think that if you go through the process of setting yourself up as a company or trust then you probably will be able to reduce the amount of tax you pay from what you pay now.  But since the pros and cons of each will vary and depend on your particular circumstances the best thing to do imo would be to talk to your accountant/financial adviser and get information from him/her.  There might even be some general info on the ATO site to give you a bit more background on the pros and cons of trusts and companies.

But the best advice I can give atm is that whatever you decide to do, make sure you do it by the book because for this coming year at least the ATO is cracking down on things like family trusts that are being used for tax avoidance.

Cheers

bullmarket


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## mit (12 May 2006)

GreatPig said:
			
		

> Not very pleasant though when the tax bill is a few tens of thousands, or even a few hundred thousand.
> 
> GP




Hey I'd love to have to pay hundreds of thousands in Tax. (Thinking of the gross income required to have to pay that much tax)


MIT


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## YOUNG_TRADER (12 May 2006)

Stop_the_clock said:
			
		

> Tax is the privilege you pay for taking a risk that pays off.....
> 
> Tax is the privilege of having employment
> 
> ...





lol, probably why so many of my Corporate Law and Banking associates are getting lured to the middle east where they don't have to pay for the 'privileges' you talk about, 

And those 'privileges' you talk about I view as rights which I have earned


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## Rafa (12 May 2006)

From what i know...

TRUST: Good as you can distribute it as you see fit, but you have to distribute everything at the end of the financial year, or pay tax at the max rate.

COMPANY: 30% tax rate on everythiing, and am pretty sure, there is no cap gains discount for holding shares for more than 1 year

SUPER: Lowest rate of tax, but wait till 60 to get it... plus limited to what you can invest, no margin lending, etc...

I've moved to trading in Family Trust... distributing to all family members...


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## mit (12 May 2006)

Rafa said:
			
		

> From what i know...
> 
> 
> COMPANY: 30% tax rate on everythiing, and am pretty sure, there is no cap gains discount for holding shares for more than 1 year




As I trade fairly short term I was thinking of a company structure as I would only pay 30% on profits.  I could build my stake faster than at my current tax rate of 47% (until I paid myself a dividend of course). My accountant said that the ATO frowned on this and look for a more legitimate reason for forming a company other than reducing tax.

From the property forums I have found another good reason to form a trust and that is in case you ever get sued, it is harder to extract your capital.

MIT


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## GreatPig (12 May 2006)

mit said:
			
		

> Hey I'd love to have to pay hundreds of thousands in Tax. (Thinking of the gross income required to have to pay that much tax)



Yeah, as I said, the income part is great (although in my case was a one-off affair, not every year unfortunately ).

However, there's a dissociation between the income and the tax, as it can be up to 18 months or so after receiving the income that the tax finally has to be paid (which in itself is good, provided you haven't been stuck on a percentage PAYG rate already).

So you feel all happy and glad when the money comes in, but a year or so later when you have to pay the tax bill, you've kinda gotten over all that and just see this huge amount of money going down the toilet to the ATO that you could buy another house with or whatever.

It's kinda like scolding the dog today for something it did 6 months ago 

GP


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## GreatPig (12 May 2006)

mit said:
			
		

> As I trade fairly short term I was thinking of a company structure as I would only pay 30% on profits.  I could build my stake faster than at my current tax rate of 47% (until I paid myself a dividend of course).



From 1st July 2006, you will need to be earning more than about $120,000 pa gross to be paying more tax than a company. Remember that while the company rate is only 30%, it's a flat rate from the very first dollar. From July, an individual earning less than $120K will pay less tax than a company earning the same amount. And that's without considering the loss of the CGT concession in a company.

Companies can also be a major PITA in that the rules relating to the use of funds in a private company are rather strict. With a family company, you have to be very careful about how you use company funds else the ATO might deem it as a dividend to you, whereby you'd lose the associated franking credits.

And as you note, to get the money safely into your own hands you have to pay a dividend, which would incur extra tax if you (as shareholder) are on a marginal rate above 30%.

Having said all that, if you're running a trading business where there are no capital gains (it's all income) and you have a reasonably large amount of funds, then a company may still be a good option. The ability to retain earnings at 30% where large trust distributions to high-income beneficiaries would involve higher rates of tax might make a company structure worthwhile. And you could make the company owned by a trust for more flexibility (although with added costs for the extra structure if you didn't otherwise need it).

In the end though of course, you should discuss your own situation with a financial professional.

Cheers,
GP


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## bowser (12 May 2006)

Has anyone else considered trading from an offshore based trading account? The commisions are higher but they are certainly less than losing 40-45% in the case of profits. I suppose one drawback is that you cant offset any losses incurred trading.


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## Rafa (12 May 2006)

dunno much about this, or if they are indeed even legal


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## crackaton (12 May 2006)

It is possible to by visas for certain country legally. You become dual citizenship and then do it that way all above board.


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## chemist (12 May 2006)

bowser said:
			
		

> Has anyone else considered trading from an offshore based trading account? The commisions are higher but they are certainly less than losing 40-45% in the case of profits.




The ATO regards the income and assets of residents of Australia to be taxable by them worldwide, so this is illegal. Not that there's anything wrong with that, of course.   



			
				bowser said:
			
		

> I suppose one drawback is that you cant offset any losses incurred trading.




You want to be pretty sure you're profitable before you do anything this dodgy. Oh, and another drawback is going to jail. See Operation Wickenby (not that they seem to be making much progress towards jailing anyone there).

Cheers,
Chemist


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## Sir Burr (12 May 2006)

> tech /a, Many underestimate or completely ignore the single biggest threat to Trading Profits---TAX!!



Yes that's why I'm interested in learning if there are other ways of minimising tax.

I rejoice when my trades are >52 weeks and many are (longer term trading here  ). I think by the sounds of it, company tax is a flat rate of 30% so there is no 50% discount! At even the top PAYE rate the tax would be less than 30% with the 50% discount. Doesn't sound too promising (for me).



> Bullmarket, I totally agree with you in trying to minimise your tax - legally of course



Not looking for any illegal stuff just interested in any other ways to minimise. I think company tax may not be the ideal in my situation due to no 50% reduction.

I believe that using a trust, tax is only paid when money is withdrawn. This sounds interesting as compounding profits is what I'm aiming for. Anyone know if the 50% rule applies with trusts and what the general tax rate is for them? (Rafa mentiones otherwise: "have to distribute everything at the end of the financial year"?)

There seems to be different ideas about the neg/pos of tax situations. It would be good if there was some "rule of thumb" for company/trusts we could go by!

SB


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## GreatPig (12 May 2006)

Sir Burr said:
			
		

> I think by the sounds of it, company tax is a flat rate of 30%



Correct.



> so there is no 50% discount!



Also correct, although that has nothing to do with the 30% rate. Companies are simply not entitled to the 50% CGT concession.



> I believe that using a trust, tax is only paid when money is withdrawn. This sounds interesting as compounding profits is what I'm aiming for. Anyone know if the 50% rule applies with trusts and what the general tax rate is for them? (Rafa mentiones otherwise: "have to distribute everything at the end of the financial year"?)



A trust has to distribute all profits (capital gains and income) at the end of each financial year to avoid being taxed at the top rate. Those profits are then taxed in the hands of the beneficiaries at their own normal rates. Effectively all profits just flow through a trust onto the beneficiaries and keep their form (ie. rent stays as rent, dividends stay as dividends, etc). Franking credits are also passed through (with some possible exceptions due to certain trust loss provisions) and the 50% discount is retained where applicable.

So if you receive a distribution from a trust, it's treated the same as if you had received it directly yourself from the original source. The tax rate is your own personal tax rate.



> It would be good if there was some "rule of thumb" for company/trusts we could go by!



My very basic rules of thumb would be:


Companies for businesses (although trusts are possible as well)
Trusts for investments
Personal names only if the amount of funds is too small to justify a trust

Most importantly, don't buy appreciating assets (those that generate capital gains) in a company structure.

Of course this is very broad, and personal circumstances may well dictate otherwise (but then that's why it's called rule of thumb ).

Cheers,
GP


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## RichKid (12 May 2006)

Rafa said:
			
		

> .........
> 
> SUPER: Lowest rate of tax, but wait till 60 to get it... plus limited to what you can invest, no margin lending, etc...
> .......




At least here you can choose different types of higher exposure/risk funds (if given the choice by your superfund) or a SMSF can use instalment warrants and other structured products.


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## Sir Burr (12 May 2006)

GreatPig,

Thankyou. Just a point in regards to:



> A trust has to distribute all profits (capital gains and income) at the end of each financial year to avoid being taxed at the top rate. Those profits are then taxed in the hands of the beneficiaries at their own normal rates.



and:


> Trusts for investments.  Personal names only if the amount of funds is too small to justify a trust



OK I'm a bit think   but if all the profits are distributed at the end of the financial year to the beneficiaries at their own normal rates, then what tax advantage would there be in using a trust?

I'm talking about, say (for example only) my better half earns $55,000 wages and trading adds another $60,000. If a trust distributes profits to her (again $60,000), then the same tax would be paid?

SB :bier:


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## GreatPig (12 May 2006)

Sir Burr said:
			
		

> OK I'm a bit think   but if all the profits are distributed at the end of the financial year to the beneficiaries at their own normal rates, then what tax advantage would there be in using a trust?



Actually, a very good question. 

The advantage of a trust is not the tax rate, but rather the flexibility of distributing profits discretionally to multiple beneficiaries (assuming you have some ). Basically it's like income splitting. But that may be countered to some extent by the fact you essentially _have_ to distribute. Also, if you have a hybrid trust (combined discretionary and unit trust), there are other options available for negative gearing as well. So primarily the advantage from a tax point of view is the flexibility, not the tax rate itself.

Of course the other big reason for using a trust is asset protection. Control but don't own is the motto. If you put things in your own name and get sued for some reason, you could lose them. If you put them correctly in a trust and get sued, then they should generally be safe.

Cheers,
GP


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## Sir Burr (13 May 2006)

GreatPig said:
			
		

> The advantage of a trust is not the tax rate, but rather the flexibility of distributing profits discretionally to multiple beneficiaries (assuming you have some ).




Thanks for your points about this GreatPig. At the moment I can't see that what I'm doing (in my situation) can be beaten but you've given me something to talk to the accountant about!


TRUST - I do not have multiple beneficiaries to distribute profits (I guess this would be good where the beneficiaries do not have other income - kids!).
SUPER - I already have this but for my own trading I want the flexibility of removing profits which rules out Super.
COMPANY - I'm a long term trader so I often receive the 50% discount which a Company does not have. 

SB


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## tech/a (13 May 2006)

GP and Sir.

Bit more on trusts.

Named benificiaries of any trust should be those with no or little taxable income.
Funds are normally allocated but not distributed,soin effect neither the benificiary or you are taxed upon that amount unless the benificiary goes into a taxable income bracket,and that would normally be a lower bracket than you.

The other disadvantage is that the benificiary can call for their distributed funds at anytime.So say your un employed sister was a benificiary and you allocate $30K a year to her and pay her small tax bill.You do this for 5 yrs.
Sis then comes to you for the $150K---and she can!!

The way around it evidently as I dont know much about this sort of thing is to give Sis the $30k have her bank it and then write you a cheque of $29500 thanks for your time Sis go buy a nice something.

There maybe many in a trust.

Strange the Name TRUST---cause thats what you'll have to do.


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## GreatPig (13 May 2006)

Sir Burr said:
			
		

> TRUST - I do not have multiple beneficiaries to distribute profits (I guess this would be good where the beneficiaries do not have other income - kids!).



Anyone in your family group, including parents, siblings, etc, can be distributed to (you'd need to check with your accountant for anyone too far removed). And as Tech said, you don't actually have to give them the money. I gather the common thing is to make it a paper entry only, pay their extra tax for them if any, and perhaps give them part of the tax saving for their effort (depending on who it is). To get around the problem of them later wanting the money back, you can get them to sign a deed of gift when they get their distribution, gifting it all back to the trust (except for any amount you want to give them for their trouble). Of course you'd want to arrange that with them in advance _before_ distributing to them. A work colleague has done this before with one of his relatives.

You have to be careful with distributing to kids under 18. You can give them up to around $700-odd a year (can't remember the exact figure off the top of my head), but after that they get taxed at a penal rate of 66%.

And if you wanted to distribute to anyone on a government benefit, you should check with them about how it would affect their benefit. My trust deed explicitly forbids distributing to people on a range of such benefits.



> SUPER - I already have this but for my own trading I want the flexibility of removing profits which rules out Super.



There are many views on super. Mine is that unless you're close to retiring, super is money down the toilet :.



> COMPANY - I'm a long term trader so I often receive the 50% discount which a Company does not have.



And with the lowering of personal tax rates in July, companies become even less attractive.

Cheers,
GP


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## Prospector (13 May 2006)

Ditto to all that GP has said about Trusts.  We have a 20 year old son to whom we were able to distribute income, he was rather pleased with his salary for that year!  As we have paid for private education fees since the day he started school, and have paid all his HECS fees, then we are able to write off any money he technically could ask for.

Our 16 year old gets only the $700 from the Trust because of that 18 year old rule, yet he works at the local pizza hut so I dont see why they cant lower the distribution age to 16.

I dont like Trusts because as a result of the income received from the Trust we have now been brought in to the old 'provisional tax' of having to pay expected income from distributions up front.  We have now scrapped the Trust because it meant we were not able to add to our super using the 9% rules as employees, and because of other issues, dont want to risk varying our quarterly 'provisional' tax payments because of the penalties involved.

We have one more payment in July and then will vary to zero for the next financial year.

We are a few years off retirement but it is in sight so we plan to salary sacrifice into that too - we do this around mid June when we hive off extra profit from our company into our Super.


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## GreatPig (13 May 2006)

Prospector said:
			
		

> I dont like Trusts because as a result of the income received from the Trust we have now been brought in to the old 'provisional tax' of having to pay expected income from distributions up front.



But that would be the same if you had the investments in your own name.

And what do you mean by paying up front? Provisional tax was scrapped some years ago and they now use the PAYG system, which is not paying up front. You only pay after you've earned the income.

I think any method you use to receive the funds regularly will result in you being in the PAYG system if the amount is high enough.

Cheers,
GP


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## coladuna (13 May 2006)

GreatPig said:
			
		

> But that would be the same if you had the investments in your own name.
> 
> And what do you mean by paying up front? Provisional tax was scrapped some years ago and they now use the PAYG system, which is not paying up front. You only pay after you've earned the income.
> 
> ...




You are exactly right. No matter whether you trade in your own name, set up a company or a trust, you will get hit with PAYG instalments. 
If you trade in your own name, however, I think it only kicks in after your investment income (non-PAYGW income) exceeds $2,000 from memory.

Before you set up a company or trust, you have to bear in mind that you'll incur additional costs in setting it up and in compliance. Unless you have a really big portfolio that generates huge amount of income, I don't think it's worth the hassle for most people.


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## Prospector (13 May 2006)

GreatPig said:
			
		

> But that would be the same if you had the investments in your own name.
> 
> And what do you mean by paying up front? Provisional tax was scrapped some years ago and they now use the PAYG system, which is not paying up front. You only pay after you've earned the income.
> 
> ...




In some cases you might get the income 'as you go' but we only receive a distribution at the end of the financial year when we know how much profit we have made.  But the tax office sends us IAS forms (I think that's the Acronym - Instalment Activity statements????maybe they are called PAYG?) each quarter based on the amount of the distribution we received LAST taxation return for the CURRENT year.  The distributions however, could be 1000's of Dollars different each financial year though!  If you vary the amount you pay and you get it more than 15% wrong, then there are very stiff penalties!

I used the term provisional tax to my accountant a few weeks ago and he said yes, effectively while the ATO dont use this phrase anymore, the concept is the same!

Cheers


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## GreatPig (13 May 2006)

Prospector said:
			
		

> In some cases you might get the income 'as you go' but we only receive a distribution at the end of the financial year when we know how much profit we have made.  But the tax office sends us IAS forms (I think that's the Acronym - Instalment Activity statements????maybe they are called PAYG?) each quarter based on the amount of the distribution we received LAST taxation return for the CURRENT year.



Don't you get a choice of paying either a specified amount or an amount based on a specified instalment rate?

I mainly get these for a company now (BAS forms), as I try not to take any extra income myself, but I found an ATO document from a few years ago where I got put into the PAYG system, and it gave two options: either a fixed amount specified by the ATO, or an amount based on an instalment rate and my actual income for the quarter (which is what the BAS forms have too). The choice can only be made once a year though, with the same method being used for the other three quarters.

If I use the instalment rate method, which I usually do, then I only pay that percentage on income I've received in the relevant quarter. So a trust distribution would fall into the fourth quarter and only have tax paid on it a couple of months or so later.

Cheers,
GP


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## Prospector (13 May 2006)

GreatPig said:
			
		

> Don't you get a choice of paying either a specified amount or an amount based on a specified instalment rate?
> 
> Cheers,
> GP




Hi GP
Yes, you get the choice to vary, but if you vary and dont pay enough (when it comes to the end of the financial year reconciliation) if you are out by more than 15% it is almost treated like Tax avoidance!  It is treated far more severely than the usual company PAYG, which I usually pay without it concerning me.  So if I varied it at the start of the year, then I am stuck with it for the rest of the year.  It also becomes a bit more complex when you have things like Interest income too!

Oh well,only 1 more to go and then I will be back to just normal PAYE tax!


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## GreatPig (13 May 2006)

Prospector said:
			
		

> you get the choice to vary



That's not what I mean. Varying is a different thing.

The PAYG forms I got (at least for the first quarter) gave two options: either pay a fixed amount, or pay an amount based on an instalment rate and actual income for the quarter.

And for whichever option I chose, there was the added option of varying either the amount or the instalment rate.

Cheers,
GP


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## Smurf1976 (13 May 2006)

I have always viewed my tax return as a kind of report card. Given that I can't change the law and intend complying with it, I _want_ to get a huge tax bill since to do so I must have earnt a lot of money during the previous 12 months.

Of course I claim deductions etc but IMO it's better to make a profit and lose up to 48.5% of that in tax than to make nothing and pay no tax.  

On a side issue, does anyone know if there's anything wrong with delaying claiming money owed by your employer (overtime, allowances etc). With the tax changes, delaying any such claims until past June 30 (only a few weeks now) could significantly increase their after tax worth depending on where you sit within the tax brackets. For some it could mean paying 30% tax instead of 42% etc which isn't a bad return for only a few weeks waiting and of course it's virtually guarnateed unless you earn more than you are expecting next year and end up back in a higher tax bracket. Even then there's still some benefit with the reductions to the old 42% and 47% rates. All assuming that the boss doesn't mind late claims for overtime etc. But is doing such a thing legal?


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## Smurf1976 (13 May 2006)

Prospector said:
			
		

> Hi GP
> Yes, you get the choice to vary, but if you vary and dont pay enough (when it comes to the end of the financial year reconciliation) if you are out by more than 15% it is almost treated like Tax avoidance!  It is treated far more severely than the usual company PAYG, which I usually pay without it concerning me.  So if I varied it at the start of the year, then I am stuck with it for the rest of the year.  It also becomes a bit more complex when you have things like Interest income too!
> 
> Oh well,only 1 more to go and then I will be back to just normal PAYE tax!



Beware that some of these forms have to be sent back to the ATO even if you are just paying the amount they ask for whilst other times you just pay and keep the form. I nearly ended up in a LOT of trouble, even though I had paid on time, because I didn't send the form in. A very strongly worded letter arrived...

Thankfully the ATO accepted my explanation that when I first came into the system I rang them and asked them what to do and they said just pay the amount and no need to do anything else. Read the form! If it askes you to send it in even if just paying the standard amount then don't forget to send it in!

That was last year and I think I'm now being investigated by the ATO as a result. They haven't done an audit so far but they're "still processing" last year's tax return.   Just as well I have all my receipts etc.


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## Sir Burr (13 May 2006)

Smurf1976 said:
			
		

> Of course I claim deductions etc but IMO it's better to make a profit and lose up to 48.5% of that in tax than to make nothing and pay no tax.



Of course I claim deductions etc too and believe it's better to learn what is available to minimise tax legally. IMO it's better to loose 16.5% in tax than to make nothing and pay no tax. 

SB


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## Prospector (14 May 2006)

Smurf1976 said:
			
		

> Beware that some of these forms have to be sent back to the ATO even if you are just paying the amount they ask for whilst other times you just pay and keep the form. I nearly ended up in a LOT of trouble, even though I had paid on time, because I didn't send the form in. A very strongly worded letter arrived...
> 
> .





You know, I think this heavy handed attitude is totally unwarranted!  Actually, it sucks!  You paid the money on time for goodness sakes! :swear: 

I recently lost a large parcel sent through Australia Post - how can the ATO prove you didnt send it, especially if you have had an excellent past record!

I too received a letter like this when I forgot to send in a quarterly BAS.  The money had been paid on time though - just forgot to post.  

On the other hand, I accidentally paid a few thousand in to my son's Tax account instead of it going into the Company Tax account through online-banking.  I didnt realise what I had done until I was speaking with the ATO because they had sent the company (my company by the way)  a statement which showed I owed them this money.  Looking at my online banking statement, all I could see was the correct amount had been "b-payed" to the ATO.    While speaking to the ATO I checked the customer number with them and while they wouldn't confirm it was my son's account (privacy issues) they were very understanding and could see that it was a genuine mistake!
So no penalty at all - and no investigations either!  Total schizo!

I wouldnt worry too much Smurf - I think it is just coincidence and they are probably just very busy at the moment.  They usually jut process the return as is, and then if an audit is required then they go back!


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