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Are you paying too much tax?

By Advertising Feature - 15 August 2011 59

pam dean

You go to work every day. You work long hours and you end up losing most of your pay in tax. Australians are among the highest taxed people in the world and its getting worse every day. The average Australian works more than six months of the year just to pay the tax man! Not only do you pay income tax but there are all those hidden taxes as well: GST applies to almost every purchase and there are additional taxes on petrol, cigarettes, alcohol, cars, etc. In fact, up to 69% of the average Australian’s income goes in tax. And now the flood levies and possible carbon taxes too. We are hurting!

Whether you agree that the country could be run better or not, the fact is that most Australians are concerned with accumulating sufficient wealth to enjoy life and fund a comfortable retirement. There are only two ways to increase wealth: increase your income or reduce your outgoings.

If you are a typical Australian, taxation represents one of your most significant outgoings—most likely your largest, in fact.

There are all kinds of ways to create genuine, legal tax deductions while actually spending more to improve the quality of life… and having lots more fun.

Fortunately, tax is an outgoing that can, in most cases, be readily reduced with a little knowledge and strategic planning, resulting in big savings. Being a poor man who controls wealth is far preferable to being rich and over-taxed.

How do I know this stuff?? I’m a former ATO Tax Fraud Investigator. I have seen many illegal ways to reduce tax. And I’ve seen many of those people jailed or made bankrupt by the ATO.

I figured there had to be a way to reduce my tax too, but do so legally – after all, the rich do it. It’s your right to minimise your tax, just make sure you do it honestly and legally.

For example, I travel extensively. Even though I am a PAYG wage-earner, many of my travel costs — both domestic and international— are tax deductible. The ATO helps me to fund my reading, attendance at training seminars and the purchase of certain CDs and DVDs. You just need to know the rules.

He helps fund my electricity and telephone services; household maintenance, my internet connection and computer costs; and dozens of other comforts I can purchase with tax free income! I can even claim the interest on my home loan. Can you?

In certain circumstances, the ATO will subsidise the cost of caring for and feeding the dog. Tradies love this one when they use their guard dogs to guard their tools and trucks when left unattended.

Certain gifts to friends and family can result in tax savings, and yes, even your wine and toys for adults…

Protect yourself from being sued or from failed relationships – business or personal. NSW is said to have the third highest number of lawsuits per capita in the world and Victoria is close behind. California tops the list. A Californian resident is likely to be sued at least four times in a lifetime so figure out the chances of a suit if you live in NSW or Victoria!

The divorce rate is currently at 40% and second and third time marriage and relationships are now the ‘norm’. It sounds cynical but think about locking your assets away before losing another house!

Don’t make the mistake of thinking you are an unlikely target. Our legal system makes it far too easy for people to mount dishonest attacks on anyone with assets. They manufacture a grievance, find a lawyer to take their case on a ‘no win, no pay’ basis, and sue.

Poor men are rarely sued. You can’t lose your wealth in a predatory legal battle if you have none to lose! Controlling income-producing assets — rather than owning them — protects you from those predatory law suits.

Avoid the mistake of thinking you don’t earn enough to bother with tax saving strategies. The only people who don’t need to pay attention to tax minimisation strategies are those who feel a moral obligation to pay more than their fair share of tax!

The world’s wealthiest citizens pay minimal tax and secure their assets in entities that provide security and tax benefits. You can too, if you know how.

Learn the benefits of working in company and trust structures, learn to negatively gear and reduce capital gains tax. Live in your investment property and make the loan deductible against your PAYG. Yes, you can do it and it’s all 100% legal.

Travel the world as a tax deduction and claim self education expenses. Getting an 18% to 45% off sales fare each time you travel sounds good to me. That’s not only on your flights, it’s also on your accommodation, meals, course costs, taxis and other relative bits and pieces. I do – and all as a tax deduction!

You can too. You just have to know how and how to do it legally. Tax can be fun. Like anything else, you just have to learn how to play the game properly.

To learn more, download two free chapters from Pam’s book Tax Secrets of The Rich.

Update : You can purchase Pam’s new book or download the first couple of chapters from Pam’s website here

Pam Dean is the owner of http://taxsavings.com.au/ where she provides up to date tax minimisation tips and resources that the Australian Tax Office does not want you to have.

What’s Your opinion?


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59 Responses to
Are you paying too much tax?
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TSI 11:03 pm 13 Sep 11

Grail said :

TSI said :

Hmmm, we haven’t experienced this type of problem before. Can you please check your spam box? If you still can’t download, please let me know.

Okay, first two chapters came through to my GMail spam folder. That was a good read, I bought the book, and that’s a good read too.

I’ll talk it over with my accountant, but it does look like there is room here to pay your kids to mow the lawn and claim that as an expense, just like you said 🙂

Thanks Grail. Out of curiosity, what part interested you the most?

TSI 10:31 pm 07 Sep 11

Grail said :

TSI said :

Hmmm, we haven’t experienced this type of problem before. Can you please check your spam box? If you still can’t download, please let me know.

Okay, first two chapters came through to my GMail spam folder. That was a good read, I bought the book, and that’s a good read too.

Thank you so much and I really appreciate your comments. So glad you finally got to download the errant chapters.
I’ll talk it over with my accountant, but it does look like there is room here to pay your kids to mow the lawn and claim that as an expense, just like you said 🙂

troll-sniffer 10:02 am 06 Sep 11

I’ve been to all manner of seminars, advisers and have researched what it takes to minimise tax and you know what? I can’t be bothered! At the moment I have a reasonable portfolio that costs me about $8,000 pa in extra tax, after I complete a simple spreadsheet each year of all obvious expenses that I can claim. It’s quite probabble that I could reduce that to $4,000 or even less with a clever application of all the tricks. But I would have to spend most of my waking hours assessing everything I do against possible tax implications.

Added to that would be the constant worry that the ATO would decide my claim for a home office or a business trip didn’t make the grade and all the savings I had generated for years would disappear in a poof of penalty smoke.

Seriously, if it’s your thing, if you have time to waste on a worry trip, go for it! It’s your right after all. But this little black duck prefers to live a less complicated life.

TSI 2:10 am 06 Sep 11

DermottBanana said :

So this is what the ATO’s tax fraud investigators get up to huh?
Explains why I reported (and provided documentary evidence of) a former employer not paying their appropriate taxes, superannuation and other obligations, and nothing’s been done.

Nah. I’m an ex tax fraud investigator. To give the guys still there their due, they have much more work than they do staff and given the complexity of much of that work, some investigations can take many months to complete. Your complaint could be still in the pipeline. Why don’t you call and ask?

DermottBanana 4:42 pm 02 Sep 11

So this is what the ATO’s tax fraud investigators get up to huh?
Explains why I reported (and provided documentary evidence of) a former employer not paying their appropriate taxes, superannuation and other obligations, and nothing’s been done.

Grail 4:16 pm 02 Sep 11

TSI said :

Hmmm, we haven’t experienced this type of problem before. Can you please check your spam box? If you still can’t download, please let me know.

Okay, first two chapters came through to my GMail spam folder. That was a good read, I bought the book, and that’s a good read too.

I’ll talk it over with my accountant, but it does look like there is room here to pay your kids to mow the lawn and claim that as an expense, just like you said 🙂

TSI 10:50 am 02 Sep 11

Grail said :

Site advertises “NO SPAM” in a huge blinking banner, and requires you to sign up for some kind of mailing list in order to check out the two chapters.

No chapters have arrived.

Smells like scam.

Hmmm, we haven’t experienced this type of problem before. Can you please check your spam box? If you still can’t download, please let me know.

2604 8:08 pm 01 Sep 11

TSI said :

I don’t avoid my taxes – I just minimise them. Avoiding is illegal.

“Avoid” was actually your word (post #39), not mine.

farnarkler 7:15 pm 01 Sep 11

I buy clothes and electronic items from overseas so I’m doing my bit for paying less tax.

Grail 5:52 pm 01 Sep 11

Site advertises “NO SPAM” in a huge blinking banner, and requires you to sign up for some kind of mailing list in order to check out the two chapters.

No chapters have arrived.

Smells like scam.

TSI 5:34 pm 01 Sep 11

The_TaxMan said :

Ah Watto I understand your argument.

The issue though really is a simple one, if the Gumbyment reduced overall tax rates everyone would pay less and therefore less revenue would be collected and it indeed impact everyone and everything.

By making it more cumbersome only a select few chose to go to effort to claim what we are ALL rightfully entitled too and thereby reduce their tas burden.

Dear Tax Man. I could not have said that more elequently myself. Thank you. 🙂

TSI 5:33 pm 01 Sep 11

Sleaz274 said :

I’m still amazed at how many people just don’t get it and are too lazy/stupid/jaded to bother helping themselves even when the information is put right in front of them. Some days I just hate people.

Wanna be poor all your life and then whinge and bitch about it? Great do exactly what you are doing now. Well done, congratulations you are a tool.

Want to help out yourself, your family and your community by keeping more of your own money rather than let it be constantly whittled away by a system designed to keep you poor? Great, read, learn, invest, save.

The government doesn’t need your help making money and in fact it’s over reliance on personal income tax/land taxes is scary. The government spends incredibly inefficiently and I’d prefer 1,000,000 people saved $1 in tax rather than the government spending $1,000,000 on a “feasibility study” paying an already rich and successful business to re-write a brief they produced 12 months ago.

In addition let’s remember you are taxed before you pay for GST hence you are using post-tax dollars to purchase a further tax. Rich people aren’t, they get to use pre-tax dollars to spend & invest then tell the tax man how much is left to tax (as little as physically possible).

Financial intelligence in Australia is sub-human level, it really amazes me.

Thank you, thank you, thank you!!! How nice it is to hear someone who thinks intelligently.

TSI 5:14 pm 01 Sep 11

2604 said :

TSI said :

You are extremely lucky if you can afford to salary sacrifice your pay to that extent. How many others, particularly those with young families and mortgages can do that? Very, very few, I would think. And how many of them may want a life now, instead of waiting until they are in their 60s and able to retrieve their super to do the things they want to do?

With respect, how many people with “young families and mortgages” are in a position to follow your strategy of taking out a second mortgage and purchasing an investment property? Assuming a purchase price of $500,000 (less than the average Canberra house price) and a 10% deposit, they’d need around $72,000 to get in to the market once transaction costs were included (stamp duty, mortgage application fees, conveyancing, inspection fees). I don’t know too many young families with that sort of cash lying around.
Even if they did, your fictional family would be far better off putting the $72,000 into a high-interest savings account, having one person salary sacrifice the maximum $25,000 per year into super (reducing his/her after-tax income by about $600 per fortnight) and drawing down $600 from the $72,000 deposit each fortnight to live off. My back of the envelope calculation tells me that the $72,000 would last for nearly five years, enough time to contribute $125,000 to super. And that’s before investment earnings.
As for having a life “now”, all of the people I know who’ve bought an investment property in the past few years complain about how all their spare cash is getting eaten up by rates, land tax, body corporate fees, landlord’s insurance, maintenance, the inevitable 2-3 weeks of vacancy between tenants, and the shortfall between the rent they receive and mortgage payments. What a burden!

TSI said :

Please, can you tell us how you avoid paying GST each time you purchase an item or a service and how you get out of paying Excise on your fuel every time you fill your car? I would love to learn how because I certainly don’t know. GST and Excise are certainly taxes and very costly taxes at that. They cannot be ignored.

They aren’t income taxes and I never claimed to be able to avoid them. If you don’t know how to avoid them either, why bring them up?

I don’t avoid my taxes – I just minimise them. Avoiding is illegal.

2604 8:31 pm 26 Aug 11

TSI said :

You are extremely lucky if you can afford to salary sacrifice your pay to that extent. How many others, particularly those with young families and mortgages can do that? Very, very few, I would think. And how many of them may want a life now, instead of waiting until they are in their 60s and able to retrieve their super to do the things they want to do?

With respect, how many people with “young families and mortgages” are in a position to follow your strategy of taking out a second mortgage and purchasing an investment property? Assuming a purchase price of $500,000 (less than the average Canberra house price) and a 10% deposit, they’d need around $72,000 to get in to the market once transaction costs were included (stamp duty, mortgage application fees, conveyancing, inspection fees). I don’t know too many young families with that sort of cash lying around.
Even if they did, your fictional family would be far better off putting the $72,000 into a high-interest savings account, having one person salary sacrifice the maximum $25,000 per year into super (reducing his/her after-tax income by about $600 per fortnight) and drawing down $600 from the $72,000 deposit each fortnight to live off. My back of the envelope calculation tells me that the $72,000 would last for nearly five years, enough time to contribute $125,000 to super. And that’s before investment earnings.
As for having a life “now”, all of the people I know who’ve bought an investment property in the past few years complain about how all their spare cash is getting eaten up by rates, land tax, body corporate fees, landlord’s insurance, maintenance, the inevitable 2-3 weeks of vacancy between tenants, and the shortfall between the rent they receive and mortgage payments. What a burden!

TSI said :

Please, can you tell us how you avoid paying GST each time you purchase an item or a service and how you get out of paying Excise on your fuel every time you fill your car? I would love to learn how because I certainly don’t know. GST and Excise are certainly taxes and very costly taxes at that. They cannot be ignored.

They aren’t income taxes and I never claimed to be able to avoid them. If you don’t know how to avoid them either, why bring them up?

Holden Caulfield 2:53 pm 26 Aug 11

watto23 said :

My point is, if we all minimised our tax the government would have less money to pay for things…

No, they’d introduce a Great Big New Tax™.

Sleaz274 2:28 pm 26 Aug 11

I’m still amazed at how many people just don’t get it and are too lazy/stupid/jaded to bother helping themselves even when the information is put right in front of them. Some days I just hate people.

Wanna be poor all your life and then whinge and bitch about it? Great do exactly what you are doing now. Well done, congratulations you are a tool.

Want to help out yourself, your family and your community by keeping more of your own money rather than let it be constantly whittled away by a system designed to keep you poor? Great, read, learn, invest, save.

The government doesn’t need your help making money and in fact it’s over reliance on personal income tax/land taxes is scary. The government spends incredibly inefficiently and I’d prefer 1,000,000 people saved $1 in tax rather than the government spending $1,000,000 on a “feasibility study” paying an already rich and successful business to re-write a brief they produced 12 months ago.

In addition let’s remember you are taxed before you pay for GST hence you are using post-tax dollars to purchase a further tax. Rich people aren’t, they get to use pre-tax dollars to spend & invest then tell the tax man how much is left to tax (as little as physically possible).

Financial intelligence in Australia is sub-human level, it really amazes me.

The_TaxMan 2:22 pm 26 Aug 11

Ah Watto I understand your argument.

The issue though really is a simple one, if the Gumbyment reduced overall tax rates everyone would pay less and therefore less revenue would be collected and it indeed impact everyone and everything.

By making it more cumbersome only a select few chose to go to effort to claim what we are ALL rightfully entitled too and thereby reduce their tas burden.

watto23 2:03 pm 26 Aug 11

My point is, if we all minimised our tax the government would have less money to pay for things. But I also mentioned that this is how the system works, but would be happy if they changed it to reduce all these expenses you can claim.

My issue is with the attitude people have about not paying tax and then wanting free health and education. It a very common attitude in australia right now. We all want to help everyone, until it costs our own pocket.

The_TaxMan said :

Wow you open with

watto23 said :

lets all minimise our tax to nothing and wonder why the government doesn’t fix ropads and provide more hospital beds.

obviously calling Pam a goose and then this clanger

watto23 said :

admittedly, I see an accountant to minimise my tax as well as thats how the system works.

So you do think we should all minimise our Tax or not? did you think at all before you posted?

Tax minisation is practiced by every high wealth individual in Australia, it is also practiced by every intelligent Business owner in the country. If you are happy to pay the tax rates you currently incur then good on you but if not then having a resource to help reduce that impost seems like a valuable tool to me. But hey what would I know I’m only the Tax Man.

Holden Caulfield 1:48 pm 26 Aug 11

The_TaxMan said :

But hey what would I know I’m only the Tax Man.

Should five per cent appear too small,
Be thankful I don’t take it all.

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