hi all please be patient with me on this subject… but i was just wondering if it is possible if i could make a corporation which my weekly pay can be paid into before tax im not a subcontractor im just an ordinary employee… i know this is probly a question i should ask an accountant but thoughy id ask anyway… also if somebody could suggest a good accountant who deals with trusts in the perth area that would be appreciated..
regards,
benYes you could do that, but you would still be taxed as it is your income.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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I think he was saying instead of getting taxed at his nominal tax rate. Getting some paid into a company to therefore pay 30 percent. That's what it reads like anyway. Could be completely wrong with my interpretation
so wilko instead of being taxed at the 48 cents to the dollar im taxed at for earning over 80g p/a if i get some of my income paid into my trust/ corporation i will only be taxed at 30 cents to the dollar ? am i correct by saying this ? this would also benefit my share portfolio being taxed at a lower rate
No not correct.
You will still individually be taxed.
A company or trust is able to contract with your employer and you can meet the alienation of personal services rules then the contracting entity may be deemed to earn the money. Then if you are performing the work you will need to be paid from the entity and pay tax at your own maeginal rates.
Not as simple as you may think.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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i understand thankyou terry
One other issue that the ATO will look at will also be whether or not the company provides a % of work/services for other clients. It can be seen to be a sham subcontracting system and you will also be caught for tax evasion.
I think that percentage is 80 percent. That's what it is the building industry. Work more then 80 percent even for the same employee as a subcontractor and you become a employee. The employer would then have to pay your super etc.
wilko1 wrote:I think that percentage is 80 percent. That's what it is the building industry. Work more then 80 percent even for the same employee as a subcontractor and you become a employee. The employer would then have to pay your super etc.These are known as the PSI rules, lots of different aspects to it, no. of clients is just 1. a quick google of ‘alienation of personal services income’ should give you some more info.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hey Terrw is right with regards to setting up a trust and assessable income. If you purchased an investment property in your name you might be able to set up a discretionary trust for the rental income it generates as a way to reduce your tax. Any thought Terryw? Cheers
You would have to buy the property in the discretionary trust and have applicable people that you could distribute to to lower your tax. But if the trust was having a negative gearing effect. You could not take loss of your personal income statement, the losses would roll over until the trust made money. And would be offset until your tax credits were used up
Lee Underwood wrote:Hey Terrw is right with regards to setting up a trust and assessable income. If you purchased an investment property in your name you might be able to set up a discretionary trust for the rental income it generates as a way to reduce your tax. Any thought Terryw? CheersFUrther to wilkos comments you could possibly lease to a trust which could then lease at a higher amount. This would divert a small amount of rent to the trust.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
yes im currently building a property which i didnt put in a trust and am currently looking at ways to put it in a trust to lower the tax i pay on it as it will put around 100 pw in my pocket and im already getting taxed at the highest rate because of my income… my next property ill look at will hopefully be a cg property most likely slighty negative can you put a negatively geared property in a trust ?
If you put a negative geared property in a trust you don't get any negative gearing effect against your income. The loss will have to be made up by your employee income. The loss remains in the trust until the point where the trust makes money and then when it makes money it would be offset against previous built up losses,
what are you figures for your new home that your building.
Bought price
build price
expetced rent and expected debt on the property.
building a new property you would receive great depriciation on a new property.
cost of house in total 344000
expected rent 500- 520 pw
house completed november2013
10 year growth of area 8.4%
all together pretty happythis may also be a stupid question but if you were to buy another ip which state would u buy in atm ?
BTW Wilkie, earning over 80k/pa isn't 48% tax rate, it's 37%+medicare… Not as bad as you think.
If I was to look interstate right now, I'd be looking into Brisbane.
Corey Batt | Precision Funding
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Also Someone on $80,000 pa would pay approx 18747.00 in tax. That is just 23.4% tax.
Great calc at http://www.taxcalc.com.au/Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
cheers terryive just used that calc very handy cheers… brickwork on house should be finished mid next week so house os coming along quickly knowing the builder helps alot
so may be looking into ip 2 quicker than first expected… i were considering buying in my local neighborhood of perth but the market is really starting to heat up so my thinking is ill hit a market thats a bit cooler…cjay could you reccomend any good buyers agents in the brisbane area ? … another question if i owned a negatively geared property in my own name to claim the tax benefits but have a positively cash flowed property owned in a trust to offset the negative gearing costs would the banks frown on this and will it effect my borrowing power ?
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