All Topics / Legal & Accounting / Legally reducing income tax

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  • Profile photo of kentonkenton
    Member
    @kenton
    Join Date: 2008
    Post Count: 28

    Hi

    I am struggling with trying to get the deposit together for our first IP.

    I earn enough as an IT contractor and apart from the (modest) mortgage we have no debt, but my wife doesn't have an income at the moment and I'm in the top tax bracket.

    I need to reduce my tax!

    I am looking at buying the book "The Tax Solution" but (from other posts) I feel this may be a bit dated.

    Can anyone suggest any good books or websites (or anything) that I can use as reference to reduce income tax?

    Thanks
    Kenton

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    Consider setting up your own smsf – salary sacrifice into that and use the funds at some point to purchase an IP.

    Set up your own IT company and have it as the contractor – then split your income with the +1.

    It may pay to see an accountant/financial planner to discuss strategies applicable to your situation.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    http://www.trustmagic.com.au/

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of eddieceddiec
    Member
    @eddiec
    Join Date: 2004
    Post Count: 113
    Scott No Mates wrote:
    Consider setting up your own smsf – salary sacrifice into that and use the funds at some point to purchase an IP.

    Set up your own IT company and have it as the contractor – then split your income with the +1.

    It may pay to see an accountant/financial planner to discuss strategies applicable to your situation.

    Both good ideas.  However, they may not be suitable when further issues are considered:

    1. With super, a fund can't easily borrow (as easy as individuals anyway and it is costly under the instalment warrant provisions) – then depending on your age, the money in the fund will be preserved until you turn 60, which may not be attractive if you are relatively young.

    2. The IT company will be subject to the "personal services income" rules, which may not be easily circumvented.

    Perhaps do it the traditional way – borrow against the equity in your home, buy the IP, and negative gear in your own name.  Having said that, need to consider asset protection if you are susceptible to risks.

    I agree, time to see an accountant to tailor a solution for you.  I dare say you wouldn't find too much on the net – specific strategies are usually closely guarded by tax professionals for obvious reasons.

    Eddie
    [email protected]

    Profile photo of kentonkenton
    Member
    @kenton
    Join Date: 2008
    Post Count: 28

    Thanks Guys,

    Yes I had a company before and through mutiple IT income streams missed the PSI rules. (Un) fortunately I have been contracting to the same company for over 2 years and it is the majoritory (95%+) of the income so I am bound to the PSI. (At least I have a steady income though).

    Our home (of 2 years) is really our first IP and we're reno'ing it as we go. All equity is being ploughed back in to complete the renos.

    I'm 42 so, not able to access my super for a few more years yet, but am keen to move it to a SMSF when it's value gets high enough. (That'll be quite some time at the current rate of decline!!!!!)

    TrustMagic, yes we have our IP trust set up ready to go …. just no capital to kick start it.

    So, no votes for the book "The Tax Solution" then?

    Kenton

    Profile photo of eddieceddiec
    Member
    @eddiec
    Join Date: 2004
    Post Count: 113

    When was the book published?

    Eddie
    [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Kenton

    Have you done a search on google for the book?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

Viewing 7 posts - 1 through 7 (of 7 total)

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