Private Investigator Saves $16,410 in Tax

Simon Jones operates a metro based private investigator business providing investigatory and surveillance services. When Simon visited his accountant, he said he was concerned about potential legal claims from unhappy individuals they had investigated on behalf of clients.

Facts:    

• $260,000 gross fee income.
• $80,000 business wages, contractors and overheads.
• Single.
• Current tax paid – $57,832

Accountant’s Advice:

• Tax Strategy 131: Companies – This involves establishing a company and selling the business across to the company. As the business income is not personal services income (PSI), income can be retained in the company and taxed at only 27.5%.
• Asset Protection Strategy 7: Company – The company structure is a separate legal entity so protects Simon’s personal assets against any claims against the business.
• Tax Strategy 12: Concessional Superannuation Contributions – Contribute $25,000 pa into super to provide for Simon’s retirement.

Results:

• Protects Simon’s personal assets if there are any legal claims  made against the business in the future.
• Reduces tax payable from $57,832 to $41,422 per year (saving $16,410).
• Provides for Simon’s retirement.