Tax evasion and tax avoidance are two separate phenomena. One is legal, and another one is illegal.
However, legal tax avoidance is the most persuasive and wise option to save your wealth if you are looking to pay less taxes. Latest statistics suggest that as the person’s income stream increases, he tends to be paying low tax in actual. This fact appears to be surprisingly false, but it is true. As you earn more and more, you will figure out more options for saving tax, such as buying a negatively geared property, setting up a trust, investing in a retirement fund, and making a donation.
Digging down further in tax savings, the following approaches could be suggested to keep yourself going by paying less tax.
- Establishing a vehicle for tax saving.
High-income earners could set up a family trust to benefit from the low tax bracket of the beneficiaries. Setting up a vehicle to obtain benefits is a completely legal exercise and will result in tax savings. Not every family has family members with low tax brackets, so this plan will not always work.
Considering the highest individual tax rate of approximately 45% with a 2% medical levy, setting up a bucket company to pool up all the individual and business proceeds and paying the tax at a corporate rate of 30% will bring certain tax savings you. This will not only bring tax benefits to you, but it could also act as a trustee, and you could separate yourself from the legal proceeds on the company.
- Creation of offshore structures.
Tax payment could be legally avoided by creating an offshore structure. Due to the non-resident status of the company, it could obtain the tax benefits in Australia and pay the offshore tax at a substantially lower rate. A unique and tailored approach will help you greatly to this extent. The tax saving through foreign structures could be made by the following means:
- Foreign Trusts.
- Offshore Partnerships.
- Personal Investment Company.
- Offshore Bank Accounts and Credit Cards.
- Offshore Private Annuities.
Various tax heavens exist in the current modern world like Panama, British Virgin Island, and many others. A specialist tailored tax advice will help you a lot in reducing your tax bill to zero.
- Claim as much as you can.
Taking account of all your expenses and incomes helps you a lot while making a tax decision. Even though your records are not detailed, careful, and cautious observation of income and expenditure once a week enables us to help you a lot while making a tax strategy for you.
You could be able to claim all of your business expenses in case you have set up an independent trust; the claimable expenses include training, wages, rent, utilities, and even the entertainment expenses incurred.
Expert advice in this regard is strongly advised as there is not much difference between tax evasion and tax avoidance, and any uncalculated move will bring consequences to you, your business, and your family as well. So, a well informed and educated decision in the supervision of a tax accountant is required.