Beating the Taxman - strategies for traders to minimise tax

[surfingman]

This is the hardest part of the whole affair. You've managed to make money trading the Aussie markets from O/S with your offshore entity paying little to no tax on your gains, now how do you get it back into the country? I had a friend who experienced this exact connundrum and he couldn't get it through. The ATO is pretty cluey.

I dare say that if you were audited you'd need to make sure the exotic cars were not in your driveway OR backyard.

Could you purchase this car from overseas entity (if its a business) at a nicely discounted rate with invoices, and bring into the country that way?

 

[UPKA]

Could you purchase this car from overseas entity (if its a business) at a nicely discounted rate with invoices, and bring into the country that way?

U certainly can, bt when registering the car, u'll raise suspisions as they go by the invoice value OR market value which ever one is the highest. unless ur car is so unique and cant be valued, i can see them catching u out for frauding the government.

 

[yonnie]

nizar, ever thought of import taxes to proctect the car industry like Holden, Mitsubishi etc

 

[Temjin]

I've already done a bit of research in all this offshore company / bank account thingly. I also posted a thread here looking for answers,

https://www.aussiestockforums.com/forums/showthread.php?t=6862

The conclusion is that any controlled foreign company income, even if it HAS NOT BEEN DISTRIBUTED (i.e. transferred back to Australia yet), must be declared in Australia. I do not know about the unrealised profit though, but I was told that even UNREALISED profit (if you have not sold the assets yet), are considered a taxable income.

So if you think you could open an offshore company and use it to open up a trading account and make money, and attempt to withdraw the money OUTSIDE Australia using tactics like anoynomous debit cards, oversea purchases, etc, etc, you will still have to declare the income the foreign company that YOU controlled and pay the appropriate tax.

I just don't see how an Australian resident can avoid paying any taxes at all for income earned BY ANY MEANS as long as they still remain in Australia and as a residant. The Australian government does sure have their own ways to get their tax money via any means...grrr...

Regardless, there are still advantages of using a company or foreign company for investment/trading purposes. You can use it to invest a property and then have the company rent it to you for depreciation and deducation purposes. Use it to be cars perhaps, buy electronic items perhaps, etc, etc. And more importantly, distribute franked income to you for you to spend, so you don't have to pay any more taxes on that income.

Anyone who claimed they opened an offshore company/account and earning income (thru trading/investing) without paying tax is definitely BREAKING the law. The ATO aren't stupid and will caught you.

 

[insider]

I've already done a bit of research in all this offshore company / bank account thingly. I also posted a thread here looking for answers,

https://www.aussiestockforums.com/forums/showthread.php?t=6862

The conclusion is that any controlled foreign company income, even if it HAS NOT BEEN DISTRIBUTED (i.e. transferred back to Australia yet), must be declared in Australia. I do not know about the unrealised profit though, but I was told that even UNREALISED profit (if you have not sold the assets yet), are considered a taxable income.

So if you think you could open an offshore company and use it to open up a trading account and make money, and attempt to withdraw the money OUTSIDE Australia using tactics like anoynomous debit cards, oversea purchases, etc, etc, you will still have to declare the income the foreign company that YOU controlled and pay the appropriate tax.

I just don't see how an Australian resident can avoid paying any taxes at all for income earned BY ANY MEANS as long as they still remain in Australia and as a residant. The Australian government does sure have their own ways to get their tax money via any means...grrr...

Regardless, there are still advantages of using a company or foreign company for investment/trading purposes. You can use it to invest a property and then have the company rent it to you for depreciation and deducation purposes. Use it to be cars perhaps, buy electronic items perhaps, etc, etc. And more importantly, distribute franked income to you for you to spend, so you don't have to pay any more taxes on that income.

Anyone who claimed they opened an offshore company/account and earning income (thru trading/investing) without paying tax is definitely BREAKING the law. The ATO aren't stupid and will caught you.

There maybe exceptions when you have dual residency... If you were a resident of some tax haven then I guess you'd probably fall under that particular havens tax laws... I don't really know for sure but there must be some exception...

 

[Temjin]

Yeah, there MAY be exceptions I am not unaware of.

But put it this way, I live in Australia, I WILL AND EXPECT to use public services provided by the Government, and thus, I expect I need to pay an "appropriate" amount of tax to utilise them. If you are a resident of this country using public services, and you are working around not to pay any tax at all by any kind of innovative/exotic tax strategies, then you shouldn't be deserved to live in Australia or use any of its public services.

Of course, that "appropriate" word is very subjective. I am for one, all in for minimising tax as much as possible legally.

As for duel residency, I have a Hong Kong Permanent resident and the tax structure there is quite favourable for investors. (no tax on CG, low company tax) In theory, I can open up a bank account in my country of birth and set up an investment firm there AS a Hong Kong resident, paying HK tax. But then, I still think this falls into the whole "controlled foreign company" because I am still technically living in Australia as an resident. So when I need to transfer the money back to Australia, I will still have to pay the applicable company tax minus the tax already paid to the HK government.

Still need to do more research in regards to this though.

 

[surfingman]

There maybe exceptions when you have dual residency... If you were a resident of some tax haven then I guess you'd probably fall under that particular havens tax laws... I don't really know for sure but there must be some exception...

I am 99% sure the Bahamas have little or no tax with dual residency with Australian citizens, a friend just come back from there will ask next time i see her.

The Bahamas (just 3/4 hour from Miami) receive over 3,000,000 tourists and businessmen each year, whilst the Caymans receive over 500,000. Why do businessmen choose to do business to these tax havens? IT'S SIMPLE. The Caymans, the Bahamas, Bermuda, Vanuatu and the Turks & Caicos Islands have no individual or corporate income taxes, no estate, inheritance or gift taxes, no employment taxes, no death duties, no withholding taxes, no sales taxes, no any kind of taxes!
http://www.global-money.com/item.print.php?id=39

not sure of the legitimacy of this site but thats what i thought....

 

[insider]

Yeah, there MAY be exceptions I am not unaware of.

But put it this way, I live in Australia, I WILL AND EXPECT to use public services provided by the Government, and thus, I expect I need to pay an "appropriate" amount of tax to utilise them. If you are a resident of this country using public services, and you are working around not to pay any tax at all by any kind of innovative/exotic tax strategies, then you shouldn't be deserved to live in Australia or use any of its public services.

Of course, that "appropriate" word is very subjective. I am for one, all in for minimising tax as much as possible legally.

As for duel residency, I have a Hong Kong Permanent resident and the tax structure there is quite favourable for investors. (no tax on CG, low company tax) In theory, I can open up a bank account in my country of birth and set up an investment firm there AS a Hong Kong resident, paying HK tax. But then, I still think this falls into the whole "controlled foreign company" because I am still technically living in Australia as an resident. So when I need to transfer the money back to Australia, I will still have to pay the applicable company tax minus the tax already paid to the HK government.

Still need to do more research in regards to this though.

I know what you're saying and I agree with you 100%... However we are simply discussing possibilities not actually attending and fulfilling them... Anyway this is my favorite thread for obvious reasons...

 

[insider]

Apparently Tony and Cherri Blair, the English prime minister, is being accused of utilizing offshore accounts with treasury bonds and what not... They are not proven claims of course... But what a role model eh?

 

[Temjin]

I know what you're saying and I agree with you 100%... However we are simply discussing possibilities not actually attending and fulfilling them... Anyway this is my favorite thread for obvious reasons...

Heh, I agree on that this is one of many threads that caught my attention.

I completely understand where you are coming from. I think I have a similar "similar" mindset as you do right now on all these "tax" minimising issues.

I am 99% sure the Bahamas have little or no tax with dual residency with Australian citizens, a friend just come back from there will ask next time i see her.

The Bahamas (just 3/4 hour from Miami) receive over 3,000,000 tourists and businessmen each year, whilst the Caymans receive over 500,000. Why do businessmen choose to do business to these tax havens? IT'S SIMPLE. The Caymans, the Bahamas, Bermuda, Vanuatu and the Turks & Caicos Islands have no individual or corporate income taxes, no estate, inheritance or gift taxes, no employment taxes, no death duties, no withholding taxes, no sales taxes, no any kind of taxes!
http://www.global-money.com/item.print.php?id=39

not sure of the legitimacy of this site but thats what i thought....

Yes, there are literally hundred of different offshore companies in which they have extremely attractive tax structure specifically designed to lure in foreign investors.

This is one of my favorite offshore site, http://www.offshoresimple.com/

Having said that, the ATO is fully aware of these tax haven countries and legistrated the concept of "controlled foreign company income" tax rules. If your foreign company aren't paying tax in those foreign countries, you will have to pay them in this country regardless. If your foreign company is being taxed at some rate, you will either get credit from the ATO (if you paid more tax than you need to as if you are in Australia) or pay the remaining tax that is not yet paid according to the local rates.

Stupid tax laws eh? Living overseas seem to be a better option now.

 

[Broadside]

I spoke to a fund manager today... and there is nothing illegal about setting up a company over seas with an offshore bank account and trading through the company... The only issue is bringing the money to Australian shores... They will ask questions... But you either bring the money in physically or discretely (as in small portions electronically) or you spend it all overseas... So basically where it gets iffy is where you try to bring it back...

yes, bring the money in discretely or spend it overseas - this is called tax avoidance, not tax minimisation, and it is illegal. You probably won't get caught but don't kid yourself it is within the law or is even ethical. Yes, ethics, I know it hasn't really rated a mention on this thread yet but there is something to be said for putting something back into the country for services, healthcare, even looking after those who can't look after themselves.

Sorry to open a can of worms

 

[Julia]

Yes, ethics, I know it hasn't really rated a mention on this thread yet but there is something to be said for putting something back into the country for services, healthcare, even looking after those who can't look after themselves.

Sorry to open a can of worms

Don't apologise, Broadside. It's a good focus to have.
I think I'm partly a closet socialist at heart. Good onyer.

 

[hongwong]

yes, bring the money in discretely or spend it overseas - this is called tax avoidance, not tax minimisation, and it is illegal. You probably won't get caught but don't kid yourself it is within the law or is even ethical. Yes, ethics, I know it hasn't really rated a mention on this thread yet but there is something to be said for putting something back into the country for services, healthcare, even looking after those who can't look after themselves.

Sorry to open a can of worms

u for real ?

there is ethics and there is stealing .........

I suggest you look into the history of tax and why we never had to pay tax .....

Happy to put back into the country, just not happy putting my country in hands of dip sticks.

Think about this ... on average we are working for 3 months for the goverment.

So please dont confuse ethics with not tax minimisation. As point earlier by theasxgorilla .. what kerry packer said.

During the inquiry he repeatedly berated the politicians conducting it, and the government. When asked about his company's tax minimisation schemes, he replied: "Of course I am minimising my tax. And if anybody in this country doesn't minimise their tax, they want their heads read, because as a government, I can tell you you're not spending it that well that we should be donating extra"

If you are that great on ethics then i suggest you stop investing in 99% of the companies out there as
BHP is "Raping the land", Cole Myer is exploiting some poor asian kid in China and so on so on ..

NEXT time I catch the public transport in Australia .. i will think how wonderful our goverment is doing ,.... but it ok, I am sure the tax man will have their Car supplied for them from the tax payer to bring them around .....

You are being a good citizen of australia by saying no to taxes ; as this isa crippling factor for australia ... ever wonder why places with no/small taxes are so far ahead ......

Yes it good to give back, but u can kept giving food to the a goldfish till it over eat itself and dies.

 

[Broadside]

u for real ?

there is ethics and there is stealing .........

I suggest you look into the history of tax and why we never had to pay tax .....

Happy to put back into the country, just not happy putting my country in hands of dip sticks.

Think about this ... on average we are working for 3 months for the goverment.

So please dont confuse ethics with not tax minimisation. As point earlier by asxgolleria .. what kerry packer said.

During the inquiry he repeatedly berated the politicians conducting it, and the government. When asked about his company's tax minimisation schemes, he replied: "Of course I am minimising my tax. And if anybody in this country doesn't minimise their tax, they want their heads read, because as a government, I can tell you you're not spending it that well that we should be donating extra"

If you are that great on ethics then i suggest you stop investing in 99% of the companies out there as
BHP is "Raping the land", Cole Myer is exploiting some poor asian kid in China and so on so on ..

NEXT time I catch the public transport in Australia .. i will think how wonderful our goverment is doing ,.... but it ok, I am sure the tax man will have their Car supplied for them from the tax payer to bring them around .....

You are being a good citizen of australia by saying no to taxes as this is a crippling factor for australia ... ever wonder why places with no taxes are so far ahead ......

ethics is a personal thing...I am well aware of what Kerry Packer said, it was a good sound byte and who likes paying the government when they waste it anyway, right. But the thing is, if everyone takes that cynical view, the country will fall apart, because a certain level of taxes is required for society to function. You cannot rely on people showing voluntary largesse, this thread is a case in point! Back to Kerry Packer again, he had a State Funeral funded by us - well those of us who pay tax anyway - that is ironic. He paid something like 15% tax on his earnings through tax minimisation.

Yes, I am for real, those of us who are doing well do owe something to our society in my opinion. What about people who can't look after themselves? not dole bludgers, but the elderly, the handicapped, and so on? Oh well, that's someone else's problem.

 

[hongwong]

Yes, I am for real, those of us who are doing well do owe something to our society in my opinion. What about people who can't look after themselves? not dole bludgers, but the elderly, the Handicapped, and so on? Oh well, that's someone else's problem.

Yes that would be good. doing this.

SAVE up for a rainner day, if you run into trouble I am sure there is some work you can do ....

If you loose your job, cut down on your expense and look for a job. Given back to society is a must, but in what form ?

As I kind of think the goverment suck at it looking after soceity, so if you reduce your tax you feel that strongly about your "ethics" and want to give back to soceity --- feel free to donate your tax returns to charity, because the govement do a dumb Azz job in looking after the social aspect of this country.

EG.
Homeless people, ..... how many minister does it take to look after the homeless ..... well let me give you a big tip, a group of people called the "salavation army" do a better job, i suggest you give the minister pay packet to the salvo to look after the homeless.

Hence you can be a dumb azz; thinking you are doing the country good by giving back to society and pay your taxes or get your tax return and donate it to some charity, hire a workman to fix a pothole, plant a tree with your tax return or even help give up your saturday to help the handicapped.

BECAUSE the goverment are not very smart at doing this.

So please dont mix up your ethics, social standard etc.

I make a profit, I choose what I want to be done with the profits but this goverment taxes my profits ........ The goverment go around wasting it, instead of re-investing in the best way. hence i dont want to give any more money to dumb people.

I hope people are smart enough to work this out.

edit :
you said :
Back to Kerry Packer again, he had a State Funeral funded by us - well those of us who pay tax anyway - that is ironic. He paid something like 15% tax on his earnings through tax minimisation.

Yep and this is why I try not to give money to dumb people so they dont waste it on your above point. I think kerry was pretty smart even when he RIP ... he did not pay much tax, when he died he got a state funeral funded by our dumb polication parties ....

But i guess he made so much money and saved so much in tax returns that he fitted all the ambulance in NSW with heart machince at a cost of 200,000 each AUD .... what a smart, social, ethical person he was or he could have given all that money to the goverment and I bet they would have done the same thing .....

 

[Broadside]

I make a profit, I choose what I want to be done with the profits but this goverment taxes my profits ........ The goverment go around wasting it instead of re-investing in the best way.

I agree there is waste, and I agree there is too much taxation, or rather, the tax system is inefficient. And I agree that charity is a good solution if you feel the need to give something back to society. But without tax, do you really believe the amount of charity given will meet the needs of society? I don't believe that because the system is flawed, we should avoid it altogether. There will always be a need for governments, and likewise there will always be a need for taxation to support those governments, in any civilised society.

I am not a naiive do-gooder, I like making a dollar as much as anyone, but I raised the question of ethics because each individual has to make a decision how far they will go to "minimise" tax and the consequences if everyone takes a similar view.

 

[theasxgorilla]

Lol theasxgorilla, i can see u still hate the TAX man with more passion .... I thought distances makes the heart grow fonder?

Example A) You are farmer.
I believe there is farming conferencing in country X or Y. You just have to prove it. The airfare, meal and hotel for that conference is tax detectable.

Hence find a share trading conference and go to it. …..
Just have to prove there was one there etc ..

CGT gain to reduce, there must be a GCT loss.

GCT is one of the worst things on a free market ….

You mean they have share trading conferences in Australia??? Cool!

 

[Junior]

By minimising income tax, CGT etc. you will have more disposable income. This extra income will most likely be spent on consumer goods - which have GST attached....hence there is no need to feel guilty about trying to legally minimise tax, you'll be sending a decent portion of your wealth to the government anyhow.

 

[hongwong]

I agree there is waste, and I agree there is too much taxation, or rather, the tax system is inefficient. And I agree that charity is a good solution if you feel the need to give something back to society. But without tax, do you really believe the amount of charity given will meet the needs of society? I don't believe that because the system is flawed, we should avoid it altogether. There will always be a need for governments, and likewise there will always be a need for taxation to support those governments, in any civilised society.

I am not a naiive do-gooder, I like making a dollar as much as anyone, but I raised the question of ethics because each individual has to make a decision how far they will go to "minimise" tax and the consequences if everyone takes a similar view.

YES . giving away to people make the person feel good about them selves

Why do you think rich people like warrent buffet, bill gates give away there fortune ....

I would like to point out the goverment before ww1 and ww2 was doing ok and no one was paying taxes back them .... ?

 

[nizar]

I know what you're saying and I agree with you 100%... However we are simply discussing possibilities not actually attending and fulfilling them... Anyway this is my favorite thread for obvious reasons...

Really?
I thought the 5k-50k would be your favourite thread