Who can Tax Plan? [next]
Starting with the Australian Tax Office: (click here to miss the boring preliminaries)
The Australia Taxation Office (ATO) is by far the most user friendly of all Federal Government Departments. The probable reason for this is because it relies on everyone to be honest enough to pay them the ATO's fair share of their income.
More and No Less:
The ATO does not want anyone to pay more than he should and in fact, goes to great lengths to provide us with all of the various devices to legitimately minimise our tax.
The ATO has two functions:
(1) to obtain funds to provide Services and Institutions to manage and govern the country:
(2) to take surplus money out of the economy to reduce inflation.
Surplus money is that part of PAYG Income or Profits which is not being used to create the real Wealth of our Nation.
function it does not have.
(3) The ATO does not have a mandate to teach. This is the brief of the State Education Departments or DEET. The Unions of these Government employees forbid the teaching of TaxPlanning as it would lead to employees thinking Rich and undermining the Union's authority.
The ATO does hold seminars, of two to three hours, advising on "Tax Compliance" which is (or should be) manditory for all new Small Business.
Two PAYE Income earners (A & B) are both on $60K /a.
"A" just wants to have a good time - wine, women and song - taxed $18K. He is further hit by tax on his beer, cigarettes, fuel, new vehicles, and other commodities and services, thus reducing his capacity to cause inflation.
"B", being smarter, prefers helping to create the Wealth of our Nation. He uses an ATO s221D PAYE Variation to minimise his Tax to Create Wealth. He would create employment for his family and increase their income producing assets.
Both are equal though "B" is more equal than "A" when it comes to TaxPlanning.
"Who Can TaxPlan?
Australia is a member of the United Nations and, as such, must allow everyone the "Freedom of Choice". In this case, the Choice is between being a "Master or a "Servant" e.g. being a Master Mechanic or a Public, Private or Domestic Servant. In law this means having a "Master to Master" (contract) or a Master to Servant (employee) relationship.
Anyone can be a "Master" to contract in his own right. But you must do it right to succeed in TaxPlanning.
A two weeks old baby doing TV commercials is a "Master" (through the Parents) for it is legally, too young to be an employee (servant).
Only a "Master" can TaxPlan - as he takes the risk and invests his own money, wealth and credibility. He is not protected by Worker's Compensation nor a Union nor any of the other impediments to full time (24 hours a day) employment.
Servants are Limited:
On the other hand, servants (employees) are limited. Serfdom, slavery, bondage or servitude has almost been abolished. Legally they can own property in their own right.
Servants Profit or Gain:
If they can own property they can also sell it for a profit or gain so Capital Gains Tax was introduced to allow the ATO to get a piece of the "Servant's" action or private enterprise.
Bad News for Servants:
The bad news is that Capital Loss can only be balanced against future Capital Gain and not against employee income. CGT, naturally, is at the employee's highest (marginal) rate unless he changes to TaxPlanning. The old system using 1/5 of the CGT added to personal income etc. etc. is no longer used but the CG is discounted by 50% for nice people.
News for Servants:
If he is "in Business" too, (i.e. Moonlighting) he can TaxPlan that rate to the lowest i.e. Nil for the first $6K, then 17% to $20,000, 30% up to $50K, 42% up to $60K then 47%.
John F. Kennedy
When he said:-
Now, doing something for your Country implies Creation of an Asset - to add to the Common Wealth.
and Control People:
Criticism or Control is not, for tax purposes, considered an asset. Thus a journalist, as an employee of a media group - or an accountant working for an employer (both Critics) - or a Government employee (Controler) - cannot really TaxPlan.
A Creative, rich person is willing to risk his own time, money and credibility to add to the Common Wealth. He can TaxPlan not to pay tax for years while he builds up his family Assets and Creates employment.
Hopefully, he eventually becomes wealthy, pays tax and retires, at no expense for the Government.
Critics and Controllers spit chips and raise a lather of sweat at this apparent inequality. Unless they become Creative people themselves, they just have to accept this blasphemy and ask, "was it ever any different?"
More Info? Click here
Critic doesn't Count:
In the end, you see, it's not the Critic that counts, nor the man who points out how the strongman stumbled, or the doer of deeds could have done them better.
The Man in the Arena:
The (tax) credit belongs to the man who is actually in the arena. Whose face is marred by the dust and sweat and blood. Who strives valiantly .... Who errs and falls short again and again ... Who knows the great enthusiasms, great devotions and spends himself on a worthy cause.
Who, at the best, knows in the end the triumphs of high achievement, and who, at the worst, knows if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.
He is Master:
He is master not servant and can carry his business losses as tax deductions for ever.
(With a little help from Wayne Bennett & Teddy Rooseveldt)
Only the Tax Payer can TaxPlan - which is really about family planning for the future. He might obtain advice from an accountant or financial planner but anyone can be an accountant or financial planner - and everyone in Australia (except you and me) is 20% bent.
The Individual Tax Return:
Every Tax Payer must fill in an Individual Tax Return. The ATO has gone to great expense to produce the "TaxPack" and it's Supplement which explains practically everything needed to TaxPlan.
The Rules of
(1) Only masters - Creative people, ready to put their own money, skill, determination and credibility on the line, are able to TaxPlan.
(2) At no time is it permissible to contravene Part IVA anti-Avoidance Legislation - unless you are prepared and cashed up to have the High Court trial your scheme of arrangement under the Federal Constitution. (Like Wik the Legislation may not hold up in Court)
(3) Tax Evasion is a criminal offence and punishable by a heavy fine and or imprisonment.
You must choose an application(s) from the list:-
(i) Primary Production
(iii) Service: eg Medical, lawn cutting.
(iv) Sales: eg Pot, books, flagpoles
(v) Rent: eg Accommodation, boats, crowd, etc
(vi) Investment: Shares, etc
There are lots of different businesses - the general rule is that they all boil down to selling a contract (no one gets paid until something is sold). If you advertise an icecream for sale (offer) and someone orders one (acceptance) and he pays (remuneration) the contract is complete and the new owner can lick)
(5) You must start up the venture with the view to eventually making a profit. Plan for loses in the early years.
(6) You must keep flawless but simple books of account. The ATO gives a list of preferred records to be kept and can order a compliance audit. If you read Michael Carmody's personal guarantee (pg 2 Tax Pack) you might notice he has a thing about accountants.
(7) You must give up the ideas of a servant - 9 to 5 employment, holidays etc. A business operates 24 hours a day 7 days doing anything to make a profit. A person who limits himself to painting Easter eggs is looking for trouble.
The Court's attitude to TaxPlanning is based on Lord Tomlin's Reason for Judgement:
"Every man is entitled if he can to order his affairs so that the tax attaching
under the appropriate Act is less than it otherwise would be. If he succeeds in ordering
them so as to secure this result, then, however unappreciative the Commissioner of Inland
Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to
pay increased tax"
(9) If you are given information which results in minimising your Tax keep it to yourself. Complex, but legal arrangements to minimise tax have been disclosed, in the past to professional critics (who cant TaxPlan). This has resulted in bad publicity, general use, abuse, and then the cessation of the scheme eg "Bottom of the Harbour" or "Negative Gearing" (shut down for a season) Most TaxPlanning now teach "schemes" on a "need to know" basis.
(10) If you are a public servant (politician, judge, policeman, teacher, clerk) dont use your position for your personal business - this is called "Rorting the System". Use your personal business(s) and generally expenses will be classified as a legitimate tax deduction.
(11) Keep up to date with what's happening. Not knowing is no alibi. Remember too, the Courts are not interested in the truth or the facts - just the evidence and the merits of the case. You are, of course , innocent until proven guilty - if you can afford it - right to the High Court.
If apprehensive on any matter of tax ring the ATO
The Tax Bible:
Trying to understand TaxPlanning without the Handbooks is like trying to get a drivers licence without learning the RTA Road Rules. There are, of course, fair dinkum Aussies who were born with all knowledge and find it offensive to admit to a lack thereoff. Usually, they fail the driving test and when it comes to business, are amoung the 80% of new businesses that go broke.
Trouble is, they usually take someone elses money with them and blame everything on someone or something other than their goodselves.
For Information on Taxation don't hesitate to check with the Australian Taxation Office Web Site:
infoline Ph 13 61 40
Gold Coast TaxPlanning/Croquet Seminars:
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