# How to avoid paying a lot of tax?



## Walkabout (2 December 2011)

Im new to futures trading and i am making a little bit of a profit. Was wondering if i should set it up as a business or not. Not sure how much tax im going to have to pay either way. If anyone has any ideas about whats best to do could you please be nice enough to let me know.. Thanks guys and girls...


----------



## nomore4s (2 December 2011)

*Re: How to avoid paying alot of tax?*



Walkabout said:


> Im new to futures trading and i am making a little bit of a profit. Was wondering if i should set it up as a business or not. Not sure how much tax im going to have to pay either way. If anyone has any ideas about whats best to do could you please be nice enough to let me know.. Thanks guys and girls...




See your accountant, is the best advice I can give.


----------



## pixel (2 December 2011)

*Re: How to avoid paying alot of tax?*



nomore4s said:


> See your accountant, is the best advice I can give.



 + 1

Apart from penalties for "hiding" your income and trying to cheat the taxman, an accountant will also know what you can deduct as education, equipment use, etc.


----------



## Walkabout (2 December 2011)

*Re: How to avoid paying alot of tax?*



pixel said:


> + 1
> 
> Apart from penalties for "hiding" your income and trying to cheat the taxman, an accountant will also know what you can deduct as education, equipment use, etc.




I didnt say anything about cheating the tax man... sheesh!!! 
I will make an appointment with my accountant


----------



## pixel (2 December 2011)

*Re: How to avoid paying alot of tax?*



Walkabout said:


> I didnt say anything about cheating the tax man... sheesh!!!
> I will make an appointment with my accountant



 sorry, pal;
the "tongue in cheek" went missing in transit. It was the combination of "avoid" and "tax" that tickled my funnybone. Definitely no offence intended.


----------



## IFocus (2 December 2011)

1st issue is to make a killing so you can pay some tax..................


Most retail traders claim losses during bear markets and beyond......


----------



## Smurf1976 (3 December 2011)

First priority is to be making a lot of money. Handing over a % to the tax man is a secondary consideration to actually making money in the first place.

I don't know your personal circumstances or attitude obviously, but most of the people I've ever met or known of who are concerned with minimising tax didn't end up actually making much money anyway.

I'd rather the tax office took 40% of a $10 million profit than spend my days getting the tax rate down to 10% only to end up with my profit falling to $10,000 because I was too busy worrying about tax. Etc.


----------



## tech/a (3 December 2011)

IFocus said:


> 1st issue is to make a killing so you can pay some tax..................
> 
> 
> Most retail traders claim losses during bear markets and beyond......





You know I feel like Im a tax collector for the Government.
These are my taxes. (Besides Employee's PAYE).

GST
PAYROLL TAX
FRINGE BENEFITS TAX
PERSONAL TAX
COMPANY TAX
CAPITAL GAINS TAX.
PROVISIONAL TAX.

Im in the process of downsizing my company--it was never big 18 employees.
but you know what incentive is there for me to stick my neck out?

Sorry not a lot to do wit the posters question but perhaps your tax issues aren't a problem!


----------



## So_Cynical (3 December 2011)

Salary sacrifice into super is a round about way of saving and paying less tax.


----------



## Wysiwyg (3 December 2011)

So_Cynical said:


> Salary sacrifice into super is a round about way of saving and paying less tax.



Are we being duped with how super contributions are taxed immediately yet unit prices don't compound (simply change price) and can go backwards? 15% guaranteed for government but there is no contributors guaranteed return. 

Amount taxed should be proportionate to return on investment?


----------



## So_Cynical (3 December 2011)

Wysiwyg said:


> Are we being duped with how super contributions are taxed immediately yet unit prices don't compound (simply change price) and can go backwards? 15% guaranteed for government but there is no contributors guaranteed return.




Yep that's why ive got 70% of my super money in direct share investments that pay dividends into the account...yet the "unit" prices of those stocks still go up and down, but i do like to see that dividend money going into the account.


----------



## explod (3 December 2011)

So_Cynical said:


> Yep that's why ive got 70% of my super money in direct share investments that pay dividends into the account...yet the "unit" prices of those stocks still go up and down, but i do like to see that dividend money going into the account.




Yep, and trading in the super (post contributions) you only get slugged 16%

So bring on more multi baggers.


----------



## skc (3 December 2011)

If you are talking about trading income the only way to reduce paying tax is to move to a difference country... e.g. there is no capital gains tax in Hong Kong.

Setting up a company is a more efficient means to compound your capital, and slightly more advantageous in terms of expenses you can claim. At some stage though you will still need to pay tax when you take money out of the company and buy that house at Vaucluse. 



Wysiwyg said:


> Amount taxed should be proportionate to return on investment?




Amount taxed *IS *proportionate to return... inside or outside Super.


----------



## Julia (3 December 2011)

skc said:


> If you are talking about trading income the only way to reduce paying tax is to move to a difference country... e.g. there is no capital gains tax in Hong Kong.



Or in New Zealand.


----------



## So_Cynical (3 December 2011)

skc said:


> If you are talking about trading income the only way to reduce paying tax is to move to a difference country... e.g. there is no capital gains tax in Hong Kong.






Julia said:


> Or in New Zealand.




According to wiki: Malaysia, Sri Lanka and Singapore also don't have a CGT.  a world of opportunity awaits.

http://en.wikipedia.org/wiki/Capital_gains_tax


----------



## McLovin (3 December 2011)

NZ wouldn't consider profits from futures trading as being a capital gain and would tax them as ordinary income. I'm pretty sure HK would take a similar approach, although happy to be corrected.

If you want to go down the path of setting up an overseas investment company, then probably best to look at Singapore as Australia has a tax treaty with them and the company tax rate is 17%. There is no tax agreement with Hong Kong (AFAIK) so you would be taxed at source and again in Australia, unless you became resident of HKG, but if you're going to do that then you're better off setting up in a tax haven with 0% income tax.

These sort of things are expensive to set up and maintain and for most investors they aren't worth the hassle. It's an area where having access to a good private banker is worth its weight in gold (ie not what most of the retail banks offer, which is really more like "you have a big mortgage with us, so here's a priority telephone line to ring if you need a new atm card")


----------



## Wysiwyg (4 December 2011)

So_Cynical said:


> Yep that's why ive got 70% of my super money in direct share investments that pay dividends into the account...yet the "unit" prices of those stocks still go up and down, but i do like to see that dividend money going into the account.



I would think a dividend would be hard to overcome the net worth loss due to share price decline. You are content to sit on a capital loss and as I note, accumulate more at the lower share price which could effectively hold you under water for years and maybe even never recover. Interesting strategy.


skc said:


> Amount taxed *IS *proportionate to return... inside or outside Super.



Yes that is true but not what I was referring to.


----------



## So_Cynical (4 December 2011)

Wysiwyg said:


> You are content to sit on a capital loss and as I note, accumulate more at the lower share price which could effectively hold you under water for years and maybe even never recover. Interesting strategy.




And the alternative dividend yielding strategy is?

-----------

Interesting that on average i have 1 bad stock from every 9 selected....average from over the last 4 and a half years


----------



## tminus (24 December 2011)

*Re: How to avoid paying alot of tax?*



nomore4s said:


> See your accountant, is the best advice I can give.




what's the best way to find a competent accountant?


----------



## Lantern (25 December 2011)

http://stopnwo.com/docs/Essential_Underground_Handbook,_2003_[PML_Publishing].pdf


----------



## Diggs1 (28 December 2011)

Create a Trust!!

See your accountant.


----------



## SevenFX (28 December 2011)

Walkabout said:


> How to avoid paying a lot of tax...




tax minimization strategies i'm guessing are legit.

https://www.aussiestockforums.com/forums/showthread.php?t=5631&page=1

http://www.google.com.au/#pq=tax+mi...osb&fp=e0be6dc5118e9780&biw=1356&bih=723&bs=1


----------



## DavidDeegan (28 December 2011)

Certainly see an accountant as has been suggested.

Depending on your circumstances a pre-tax contribution to superannuation could help, if within the concessional contribution limits this will reduce the tax to 15%.

Setting up a company means you will pay tax of 30% on your futures trading profits.

If you setup a trust then whoever receives the distribution of futures trading profits will pay tax on that distribution at their marginal rate of tax.

If setting up a company or trust there will be both initial and ongoing costs involved, so depending on your situation you may choose to just pay the personal income tax or put the profits into super pre-tax until the futures trading profits are enough to justify the costs involved for a company or trust.


----------



## CanOz (29 March 2012)

Julia said:


> Or in New Zealand.



 Or china, or Thailand ..... The trick is to stay expat as long as possible for tax purposes. Being a citizen of a commonwealth country but a non resident for tax purposes. It means lots of hassles with temporary visas, frequent visa runs, no kids, and a love for travel. 

Once we start having kids we will need the benefits that  being a tax payer provides and will need to settle down and start to contribute.....make hay while the sun shines I say (as I sip another cool drink and enjoy the view from the Soneva Kiri Resort)!

CanOz


----------



## McLovin (29 March 2012)

CanOz said:


> Or china, or Thailand ..... The trick is to stay expat as long as possible for tax purposes. Being a citizen of a commonwealth country but a non resident for tax purposes. It means lots of hassles with temporary visas, frequent visa runs, no kids, and a love for travel.
> 
> Once we start having kids we will need the benefits that  being a tax payer provides and will need to settle down and start to contribute.....make hay while the sun shines I say (as I sip another cool drink and enjoy the view from the Soneva Kiri Resort)!
> 
> CanOz




Unless you change your domicile (which temporary visas do not do) then you would still be an Australian resident for tax purposes. Being out of the country for 183 days/year is not the only test.

Nice to know that you won't contribute to the system until you need benefits.


----------



## CanOz (29 March 2012)

McLovin said:


> Unless you change your domicile (which temporary visas do not do) then you would still be an Australian resident for tax purposes. Being out of the country for 183 days/year is not the only test.
> 
> Nice to know that you won't contribute to the system until you need benefits.




I've been an expat for almost 7 years......PWC is positive that I'm an expat for tax purposes. 

I pay tax in the country that I reside in.....I just don't pay capital gains tax.

I am a proponent of taxes, provided the benefits are realized in good health care and education, as a minimum......for all.

CanOz


----------



## McLovin (29 March 2012)

CanOz said:


> I pay tax in the country that I reside in.....I just don't pay capital gains tax.




Fair enough. 

Re CGT: Again it goes back to what is a capital gains tax event. For most traders it doesn't matter where they are living their capital gains are not considered CGT events and instead will be taxed as ordinary income.


----------



## CanOz (29 March 2012)

McLovin said:


> Fair enough.
> 
> Re CGT: Again it goes back to what is a capital gains tax event. For most traders it doesn't matter where they are living their capital gains are not considered CGT events and instead will be taxed as ordinary income.



  Yes, you're correct...certainly in respect to Canada and Australia where it is taxed as if it were normal income. I suspect countries that have less complex personal income tax laws, such as china, they just keep it simple for now and do not tax capital gains. They do tax traders though, through a transaction tax.

You seem quite well versed in tax McBeancounter.....are you a bean counter?

CanOz


----------



## McLovin (29 March 2012)

CanOz said:


> Yes, you're correct...certainly in respect to Canada and Australia where it is taxed as if it were normal income. I suspect countries that have less complex personal income tax laws, such as china, they just keep it simple for now and do not tax capital gains. They do tax traders though, through a transaction tax.




The basis for CGT is to tax non-inventory asset gains. Otherwise in theory, no company should pay tax because they are all in the business of realising a capital gain (buying a good for $x and selling it for $x+y). I'm not familiar with Chinese tax law, but I'm sure they get someone to pay up.



CanOz said:


> You seem quite well versed in tax McBeancounter.....are you a bean counter?
> 
> CanOz




God no, I think I'd pull my hair out if I was an accountant (no offence to any accountants). I was in banking so I've had a fair bit of exposure to these sort of things.


----------

