The Elephant in the room - Taxation

[farmerge]

then top up the list should be the English Royal Family with their deep and complicated holdings throughout much of the world
i can think of some other prominent families with large internationally diverse holdings that might attract similar scrutiny

I think it is only in recent toms that the Hous of Windsor actually started paying tax. Not sure who sets the rate or if it is deemed take what I offer as a gift.

 

[farmerge]

My personal fortune was started by delivering papers and picking fruit too, so I know what it’s like to build a fortune from the ground up. I still don’t see how this fact would mean I shouldn’t be taxed, or why my fortune shouldn’t be taxed before it hits my nieces and nephews balance sheets.

Hmmm all this take about how personal fortunes were made. I've given up on the first million entirely and am now diligently working on the 2nd and 3rd.

 

[Value Collector]

I think it is only in recent toms that the Hous of Windsor actually started paying tax. Not sure who sets the rate or if it is deemed take what I offer as a gift.

The tax they pay is voluntary there is no set rate and how much they pay is decided by them, and they don’t get audited.

 

[Value Collector]

Hmmm all this take about how personal fortunes were made. I've given up on the first million entirely and am now diligently working on the 2nd and 3rd.

As they say the first one is the hardest, but eventually they cascade in.

 

[divs4ever]

Hmmm all this take about how personal fortunes were made. I've given up on the first million entirely and am now diligently working on the 2nd and 3rd.

one million goes nowhere if your assets include property

with unofficial inflation building better aim for a b (illion ) ( or two )

 

[divs4ever]

As they say the first one is the hardest, but eventually they cascade in.

not me , i simply outlived half ( one side ) of the family

keeping that first million looks to be the challenge , for me

( but keeping most of it would be fine for me , as i drift towards the sunset )

 

[farmerge]

The tax they pay is voluntary there is no set rate and how much they pay is decided by them, and they don’t get audited.

Oh to be a Royal with those rules which don't really exist.

 

[dyna]

the ATO. They never get it wrong

Bet your ass they get it wrong !
Everybody and his dog knows a $27,500 superannuation contribution on your tax return would just have to be a pre-tax /concessional contribution, right? Especially those goons down at the ATO. One would think . Surely.
Nah, send this dude a nasty letter accusing him of exceeding his TSB limit, with excess after tax/ non- concessional contribs.
" Here's what you must now do , to comply with the law. If not , fines will apply , plus interest , blah , blah ."
That was for my 2021 tax return.
Then the ferkels repeat their own mistake for my 2022 tax return !
No apology. Just cop it sweet. Lucky I'm " au fait " with this super rigmarole.
Imagine the torment for some poor bugger not up to speed with all this crap?

 

[mullokintyre]

You are also assuming there that income tax has been paid along the way, it’s often not paid in the case of some of these super wealthy, because they can get away without paying them selves a taxable income.
For example, rather than pay him self $100 M as a dividend which would be taxable at 47%, a super wealthy person can go to their private banker, their company makes a deposit of $100M long term deposit at 0.1% interest, that bank then gives the individual a personal loan of $100M at say 0.2%.
The bank makes a risk free margin of 0.1% on the $100M per year and the billionaire avoids paying 47% tax on his dividend, even if he keeps the loan going for 30years he only pays 3%.
——————————
Secondly, if some one does build a large fortune, and decides to hand to to the next generation rather than give it away to charity like some people choose to do, why shouldn’t that next generation pay some tax on it, I don’t think it’s a bad thing for once a generation to clip some of these large family fortunes if they decide to keep it in the family for another generation.

I wonder how your hypothetical person who owns the company got the 100mill within the company in the first place?
Did it just appear as if by magic?
If it was via commercial trading, then any income would be subject to company tax as they built up the 100mil
If it was due to selling an asset, it would have paid capital gains.
As to your scheme for doing a deal with a private bank, have you got any evidence it happens or did you just dream it up?
Would a private bank settle for 0.1% on a scam like the above? I bet they would want at LEAST10%! , especially if the ATO did an audit of the target and declared it was an artificial scheme to avoid tax under part IVA. The private bank would be charged along with the target for facilitating it. The ATO would sniff out a 100mill transaction in no time.
Mick

 

[Value Collector]

I wonder how your hypothetical person who owns the company got the 100mill within the company in the first place?
Did it just appear as if by magic?
If it was via commercial trading, then any income would be subject to company tax as they built up the 100mil
If it was due to selling an asset, it would have paid capital gains.
As to your scheme for doing a deal with a private bank, have you got any evidence it happens or did you just dream it up?
Would a private bank settle for 0.1% on a scam like the above? I bet they would want at LEAST10%! , especially if the ATO did an audit of the target and declared it was an artificial scheme to avoid tax under part IVA. The private bank would be charged along with the target for facilitating it. The ATO would sniff out a 100mill transaction in no time.
Mick

They’d could have got the money in a million different ways, eg mining Iron Ore, building apartments, making electric vehicles, starting a social media company, selling tomato sauce it really doesn’t matter.

Yes, the company may have paid its company income tax (or it may not have), but so have the companies that we all invest in, however where they can fiddle with their tax is the taxes they pay at the personal level.

And if the company is completely private company eg, not one on the share market, they can expense a lot of their private expenses through the company, lowering both their company tax obligations and personal tax.

 

[Value Collector]

Would a private bank settle for 0.1% on a scam like the above? I bet they would want at LEAST10%! , especially if the ATO did an audit of the target and declared it was an artificial scheme to avoid tax under part IVA. The private bank would be charged along with the target for facilitating it.

Banks do deals like that all the time, 0.1% seems low but because the numbers are large it’s basically free money, Also offering the service might allow them to take on many more of the the company’s other more legitimate banking at higher margins.

It’s not illegal, and if some one was worried about the optics of the situation during an audit, they can use international banks and use a separate bank to hold the deposit to the one the makes the loan

—————————
This is also not limited to individuals, large corporations like Apple can use this method to repatriate money back to the USA from their tax shelters without being subject to repatriation taxes.

 

[farmerge]

They’d could have got the money in a million different ways, eg mining Iron Ore, building apartments, making electric vehicles, starting a social media company, selling tomato sauce it really doesn’t matter.

Yes, the company may have paid its company income tax (or it may not have), but so have the companies that we all invest in, however where they can fiddle with their tax is the taxes they pay at the personal level.

And if the company is completely private company eg, not one on the share market, they can expense a lot of their private expenses through the company, lowering both their company tax obligations and personal tax.

Well renumerated bean counters earn their wealth with clever accounting.

 

[Belli]

Bet your ass they get it wrong !
Everybody and his dog knows a $27,500 superannuation contribution on your tax return would just have to be a pre-tax /concessional contribution, right? Especially those goons down at the ATO. One would think . Surely.
Nah, send this dude a nasty letter accusing him of exceeding his TSB limit, with excess after tax/ non- concessional contribs.
" Here's what you must now do , to comply with the law. If not , fines will apply , plus interest , blah , blah ."
That was for my 2021 tax return.
Then the ferkels repeat their own mistake for my 2022 tax return !
No apology. Just cop it sweet. Lucky I'm " au fait " with this super rigmarole.
Imagine the torment for some poor bugger not up to speed with all this crap?

You didn't by any chance contribute an odd amount at some stage of say $110.51 to max out the $27.5k? Sure it may be on your personal return as $27.5k but due to truncation reporting the super fund would show $110 as concessional and the $0.51 is then non-concessional. If you have also maxed the non-concessional via a bring-forward, the $0.51 could trigger an excess contribution situation from the ATO's standpoint.

 

[dyna]

These dopes at the ATO work in mysterious ways. With me at least. Wasting countless manhours, ( ... Umm , that will be taxpayers' money here , folks... going down the drain ) when a single phone call to the super fund would provide everything they need : the contribution deposit date , the time when the exact amount of 15% tax was taken out . So it ought to be obvious that this dude is claiming a tax deduction. ( Stuff all to do with non-concessional ) Same as every previous year's tax return. Then to bugger it up two years in a row . I'll be using a big fat marking pen on my next return, just so the pr* cks can't miss it .

 

[Belli]

These dopes at the ATO work in mysterious ways. With me at least. Wasting countless manhours, ( ... Umm , that will be taxpayers' money here , folks... going down the drain ) when a single phone call to the super fund would provide everything they need : the contribution deposit date , the time when the exact amount of 15% tax was taken out . So it ought to be obvious that this dude is claiming a tax deduction. ( Stuff all to do with non-concessional ) Same as every previous year's tax return. Then to bugger it up two years in a row . I'll be using a big fat marking pen on my next return, just so the pr* cks can't miss it .

I dont think the systems are configured to accept a big fat marker pen as data - unfortunately. Close to zilch human involvement in processing returns now or with those lovely system produced letters we sometimes receive.

 

[farmerge]

I dont think the systems are configured to accept a big fat marker pen as data - unfortunately. Close to zilch human involvement in processing returns now or with those lovely system produced letters we sometimes receive.

Heartless, computers programmed by, well that is up to your imagination.

 

[Belli]

Heartless, computers programmed by, well that is up to your imagination.

Yeah. It's complicated. Approximately 15m or thereabouts of individual tax returns each year, 600k+ SMSFs (with a total of over 1m members) plus companies, trusts, etc, etc. So issues will arise despite the ATO receiving data from banks, share registries, state governments and employers.

Anyway, with that volume, no way is there (or will be) a sufficient number people at the ATO to provide individual service for a specific tax return. Paper returns would probably be loaded into a scanner with a capacity of 100k pages per day. Nobody would actually read them - no time to do so. As for a personal phone call from the ATO to discuss individual needs, forget it. It'll be up to the individual to sort problems out.

 

[mullokintyre]

I dont think the systems are configured to accept a big fat marker pen as data - unfortunately. Close to zilch human involvement in processing returns now or with those lovely system produced letters we sometimes receive.

Au Contraire Mr Beli.
One of my rellos works in the ATO Albury data centre. There are still a floor full of ladies key punching data into terminals.
She seems to get as many shifts as she wants as a KPO.
Mick

 

[Belli]

Au Contraire Mr Beli.
One of my rellos works in the ATO Albury data centre. There are still a floor full of ladies key punching data into terminals.
She seems to get as many shifts as she wants as a KPO.
Mick

Now that is interesting. Thank you for that and it is much appreciated. Question. Does the lass have the flexibility to determine if a return requires investigation or is her role only to enter data and no more beyond that?

 

[mullokintyre]

Now that is interesting. Thank you for that and it is much appreciated. Question. Does the lass have the flexibility to determine if a return requires investigation or is her role only to enter data and no more beyond that?

The "lass" is far to discrete to give to much away. But from the little she has said about her work, I gather it is purely data entry.
Mick