This strategy involves a discretionary trust making pre-tax trust distributions to a tax-exempt beneficiary. If the beneficiary is tax exempt (a not-for-profit organization or church) then there will be no income tax paid on that income by the beneficiary. The beneficiary does not need to be able to receive tax deductible donations (i.e. be a…
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In the novice stage, a person follows rules as given, without context, with no sense of responsibility beyond following the rules exactly. Competence develops when the individual develops organisational principles to quickly access the particular rules that are relevant to the specific task at hand; hence, competence is characterised by active decision making in choosing…
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Without doubt, the dominant legal reason to use tax havens is to save tax. Many taxpayers, especially multi-national corporations, can legally save tax by structuring their affairs to use a tax haven. Apple, for example, has saved US$86 billion in US taxes by funnelling revenue through its tax haven entities and leaving the profits overseas.…
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Delaying the realisation of assets (and any assessable capital gains) until after the year end results in the income being taxed in the following financial year. To achieve this objective the sale contract must not be signed until after the end of the financial year (as it is the contract execution date that determines the…
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This quote by Plato, the Classical Greek philosopher, mathematician, student of Socrates, writer of philosophical dialogues, and founder of the Academy in Athens, sums up the central issue some accountants have with tax planning – they just cannot get started. The day to day grind of servicing the needs of compliance clients leaves them with…
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Tax havens can be used by individuals, small businesses, large businesses, Fortune 500 companies, governments, charities, and non-profit organisations. The numbers are staggering, with the British Virgin Islands, for example, having over 1 million registered companies. In the Cayman Islands, 40 of the world’s top 50 banks have licences, and hold US$1 trillion on deposit.…
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Changing from employee to contractor (business) has the benefit of making some private expenses tax deductible. Expenses such as motor vehicle, home office, travel, etc., may become deductible. A contractor’s total expenses are normally maximised by utilising the PSI Entity strategy which may make private motor vehicle expenses and living away from home accommodation and…
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Most practice principals meet the Tax Practitioner Board requirements of thirty hours accounting and tax training per year. Unfortunately, this is normally exclusively related to their compliance related services with no training on value added services such as tax planning. A search of all the accounting professional bodies extensive training and website resources comes up…
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Although there is no consensus on the number of tax havens in the world it’s estimated at over 150. Some of these tax havens are whole countries (like Bermuda), and others just a state or territory within a country (like Nevada). The list of tax havens is constantly changing as new tax havens are added…
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All important client advice should be provided to the client in writing (irrespective of whether also provided to the client verbally as well). This practice is recommended by both the ATO and professional bodies to protect both the client and the practice. A tax plan fits into this important category so should definitely be in…
Read More »"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2