Beating the Taxman - strategies for traders to minimise tax

[jj0007]

The most effective way to beat the tax man trading is to trade on 12 month periods and get the 50%CGT

Aside from that I believe a discretionary trust is a good vehicle. Not only can you minimise your tax, your assets are also protected. i.e. no heather mills is going to get my hard earned :

Just remember though. There is a difference between tax minimisation and tax avoidance. One could land you in jail.

 

[jemma]

Can you ellaborate? Is this instance of an offshore account illegal, or are you saying that all instances of offshore accounts are "very illegal"?

ASX gorilla, establishing an offshore account through an offshore company is illegal if you are a resident of Aust as all gains are still captured under our tax laws even if they are putthrough an offshore tax haven with zero tax.

There are complex tax laws that capture such gains as a resident. You will go to jail if you have done this, I have looked into it.

Glen wheatley(farnham's manager) is facing jail terms by doing this, it was front page of fin review 2 weeks ago.

 

[drmb]

Set up Self Managed Super Fund and pay 15% tax. See http://www.esuperfund.com.au/ for one of the cheapest if not the cheapest ways of doing this, from post in Shares and Super. I had my SMSF set up by Dixons so I haven't used esuperfund so do your own research please.

 

[insider]

Well what I've gathered so far is if you hold a stock for more than 12 months you pay 50% of the Capital Gains Tax... If I traded under a company and got a capital gains tax rate of 30% plus held a stock for more than 12 months does that mean I just have to pay a CG tax rate of 15%?

 

[theasxgorilla]

Insider, nope...companies don't get the CGT discount.

 

[theasxgorilla]

ASX gorilla, establishing an offshore account through an offshore company is illegal if you are a resident of Aust as all gains are still captured under our tax laws even if they are putthrough an offshore tax haven with zero tax.

I don't believe that this statement is true. There is nothing illegal about offshore accounts or offshore companies. You can be a resident in Australia AND be a director of an offshore company with offshore accounts and there is NOTHING illegal with this setup.

 

[insider]

Set up Self Managed Super Fund and pay 15% tax. See http://www.esuperfund.com.au/ for one of the cheapest if not the cheapest ways of doing this, from post in Shares and Super. I had my SMSF set up by Dixons so I haven't used esuperfund so do your own research please.

Is there a way to setup a self managed super fund and then actually take the money out whenever I want so that I can take advantage of the 15% CGT?

 

[money tree]

best tax structures are in rank:

1. Super
2. Company in Trust
3. Trust
4. Company
5. Partnership
6. Couple
7. Individual

Super wipes the floor with the rest of them by a massive margin.

 

[carmo]

best tax structures are in rank:

1. Super

Super wipes the floor with the rest of them by a massive margin.

By Super do you mean setting up a SMSF?

 

[theasxgorilla]

best tax structures are in rank:

money tree, does this ranked list infer something about an individual's tax bracket, their partner's tax bracket, and the size of their account?

 

[dutchie]

The main disadvantage of a super fund is that it cannot borrow money.

So whilst it may be the most tax effective structure it may not be the most profitable.

I would rather pay 30% tax on $2 than 15% tax on $1 - (broad generalisation not accounting for interest costs etc)

Cheers

Dutchie

 

[Staybaker]

The main disadvantage of a super fund is that it cannot borrow money.

Yes. The second disadvantage of a super fund is that you cannot get your money out until you retire (in answer to insider's question above). So if you are young, this could be a big problem.

Cheers, Staybaker.

 

[money tree]

actually, a Super fund can borrow. Instalmant warrants are an example. There are good reasons for not letting people use 50x leverage with their retirement

as for not being able to spend the funds, thats common sense also. How will you get rich by spending?

 

[theasxgorilla]

as for not being able to spend the funds, thats common sense also. How will you get rich by spending?

What if you "get rich" in the fund before you're 60?

 

[insider]

What if you "get rich" in the fund before you're 60?

surely there are exceptions to this, like maybe you're migrating to another country, you're sick, or maybe there is some property you want buy as an 'investment'. In the end it is your money right?

 

[theasxgorilla]

surely there are exceptions to this, like maybe you're migrating to another country, you're sick, or maybe there is some property you want buy as an 'investment'. In the end it is your money right?

Correct...

* You reach age 65;
* Permanent or temporary incapacity established to the satisfaction of the Trustee;
* Death;
* Severe financial hardship established to the satisfaction of the Trustee based on specific guidelines;
* APRA approves early release (compassionate grounds);
* Permanent departure from Australia by eligible temporary residents;
* Termination of gainful employment (where preserved benefits are less than $200;
* You reach preservation age (see table below) and commence a non-commutable income stream. There is no requirement to cease a gainful employment'
* You reach age 60 and cease a gainful employment;
* Permanent retirement on or after you reach your preservation age

 

[YELNATS]

actually, a Super fund can borrow. Instalmant warrants are an example.

That's right. Here's a quote from quantumwarrants www.quantumwarrants.com.au "Super funds are generally not able to borrow to invest in property, principally because a normal investment property loan can put all the fund’s assets at risk.

A fund can invest in property through a QuantumWarrant, because the warrant provides a ‘limited recourse’ loan to help finance the purchase of the property. This limits your risk to the property itself – your other assets are completely protected.

Many leveraged investments, like margin loans and normal investment property loans, expose all your assets to risk if there’s a default. With QuantumWarrants the risk is limited to the value of the property – no matter what happens".

And also ... "Approved by the Australian Taxation Office - The ATO has issued a product ruling on QuantumWarrants stating that an individual, company, trust or a superannuation fund can invest in them. Interest is tax deductible and there is no capital gains tax event when the loan is fully repaid and the property transfers to the investor. The full ATO Ruling is in the product disclosure statement or is available directly from Quantum."

I'm not sure how prevalant this investment vehicle is in Australia. Do anyone have any personal experience and can anyone advise? regards YN

 

[jemma]

I don't believe that this statement is true. There is nothing illegal about offshore accounts or offshore companies. You can be a resident in Australia AND be a director of an offshore company with offshore accounts and there is NOTHING illegal with this setup.

It is not illegal but you still must declare the income from foreign sources.

Also if you make 300K in offshore trading accounts, how do you get the money back in the country without raising alarm bells from the ATO???

They get a report via the banks every transaction in and out above 10 grand through Austrac.

 

[Duckman#72]

By Super do you mean setting up a SMSF?

Doesn't matter - whether you are in your own SMSF or industry fund - from a tax viewpoint they will be exactly the same.

What will be different will be performance of your investments.

 

[Duckman#72]

I don't believe that this statement is true. There is nothing illegal about offshore accounts or offshore companies. You can be a resident in Australia AND be a director of an offshore company with offshore accounts and there is NOTHING illegal with this setup.

Yes - you are correct - there is nothing illegal in that setup. What is illegal, is for an Australian resident not declaring foreign income!!

I really don't think that posts suggesting the opening of o'seas bank accounts and the creation of offshore companies is really something that the average ASF user should be concerning themselves with.

Duckman