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Millionaires that pay no tax

#21 User is offline   HDMC 

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Posted 25 May 2013 - 08:02 AM

Here's a novel idea - make these bastards pay their fair share.



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#22 User is offline   Bam 

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Posted 01 June 2013 - 05:58 PM

Moderator note - I have moved HDMC's post from the GST thread because I felt that the post matched this topic better.

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#23 User is offline   Bam 

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Posted 01 June 2013 - 06:01 PM

View PostHDMC, on 25 May 2013 - 08:02 AM, said:

Here's a novel idea - make these bastards pay their fair share.

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Yes. Tax avoidance (or "minimisation" as it is euphemistically called) denies legitimate taxation income from consolidated revenue and increases the burden on everyone else. It doesn't matter if it is individuals or companies.

This is not just a topic relevant to Australia; the USA and UK have also been taking a look at this in the last year or two.
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#24 User is offline   icey 

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Posted 02 June 2013 - 08:04 PM

View PostBam, on 01 June 2013 - 06:01 PM, said:

Yes. Tax avoidance (or "minimisation" as it is euphemistically called) denies legitimate taxation income from consolidated revenue and increases the burden on everyone else. It doesn't matter if it is individuals or companies.

This is not just a topic relevant to Australia; the USA and UK have also been taking a look at this in the last year or two.


That's no euphemism Bam.

Quote

Tax minimisation is when you legitimately arrange your tax affairs to reduce the amount of tax you pay. These arrangements comply with both the letter and spirit of the law.


Tax minimisation is something that all taxpayers (and taxable entities) happily pursue when they are able, irrespective of their income. By way of example, the few union members remaining avoid tax (or minimise, to use a euphemism :rolleyes: ) their tax by claiming union fees as a deduction, thereby placing a burden on low income earners such as myself.

That said, it was quite a few years ago that the ATO cast a wide net when the rules were changed to ban "deliberate approaches to exploit the tax system"

Validating your apparent confusion, I just found the following interesting article from 2008:

The distinction between tax avoidance and tax evasion has become blurred in Australia: Why has it happened?

Quote

The distinction between tax avoidance and tax evasion has been well established in the Australian taxation system. However, for some time the Australian Government has ignored the difference between the two concepts when it comes to Australians using tax havens and being investigated as part of ‘Project Wickenby’.The Australian Government is deliberately labelling all attempts to minimise income tax through the use of tax havens and offshore financial centres (OFCs) as tax evasion and therefore a criminal act.
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#25 User is offline   Bam 

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Posted 03 June 2013 - 07:32 AM

View Posticey, on 02 June 2013 - 08:04 PM, said:

That's no euphemism Bam.

Tax minimisation is something that all taxpayers (and taxable entities) happily pursue when they are able, irrespective of their income.

I've given it a little thought and IMO I do not consider tax avoidance and tax minimisation to be the same, in a similar way to tax avoidance and tax evasion being different.

Here's how I would define it - and I stress that this is just my opinion:
  • Tax evasion - Illegal (eg: fraudulently not declaring income)
  • Tax avoidance - Of dubious legality, likely to attract scrutiny (eg: transfer pricing)
  • Tax minimisation - Using legal methods to reduce tax (eg: negative gearing, carbon tax)

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By way of example, the few union members remaining avoid tax (or minimise, to use a euphemism :rolleyes: ) their tax by claiming union fees as a deduction, thereby placing a burden on low income earners such as myself.

Tax deductions for union dues are a legitimate expense against income earned. You're complaining about union dues when numerous other deductions cost the taxpayer much more in total and are therefore deserving of scrutiny - transfer pricing, profit shifting, negative gearing, concessional rates of capital gains and numerous other methods. If concerns exist, the deductibility of union dues is so far down the list that it's unlikely ever to be a problem. If they were such a rort, why aren't people queuing up in droves to become union members to exploit this loophole?

The issue of companies avoiding tax is of particular concern.
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This post has been edited by Bam: 03 June 2013 - 07:35 AM

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#26 User is offline   icey 

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Posted 03 June 2013 - 11:05 AM

View PostBam, on 03 June 2013 - 07:32 AM, said:

Tax deductions for union dues are a legitimate expense against income earned. You're complaining about union dues when numerous other deductions cost the taxpayer much more in total and are therefore deserving of scrutiny - transfer pricing, profit shifting, negative gearing, concessional rates of capital gains and numerous other methods. If concerns exist, the deductibility of union dues is so far down the list that it's unlikely ever to be a problem. If they were such a rort, why aren't people queuing up in droves to become union members to exploit this loophole?

The issue of companies avoiding tax is of particular concern.


I'm not for a minute calling union fees a rort (though the dwindling queue for membership will be partly because of rorts by unions themselves).

I used union fees as an example of tax minimisation for the common man. There are reasons that union fees are conceded by the ATO just as there are for other means of tax minimisation. Minimisation per se is not necessarily bad..... or is it only bad if one does not personally have access to the mechanism?
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#27 User is offline   HDMC 

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Posted 03 June 2013 - 11:45 AM

View Posticey, on 03 June 2013 - 11:05 AM, said:

I'm not for a minute calling union fees a rort (though the dwindling queue for membership will be partly because of rorts by unions themselves).

I used union fees as an example of tax minimisation for the common man. There are reasons that union fees are conceded by the ATO just as there are for other means of tax minimisation. Minimisation per se is not necessarily bad..... or is it only bad if one does not personally have access to the mechanism?




Part IVA is designed to address the practice of utilising a scheme solely for the purpose of minimising tax - legally or not.

Union dues definitely wouldn't come under scrutiny.
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#28 User is offline   lenxyz 

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Posted 03 June 2013 - 01:36 PM

Bam, icey and HDMC are all correct in certain respects.

There is a difference between Tax evasion, Tax avoidance and Tax minimisation.

Tax minimisation of course covers tax evasion and tax avoidance. More correct is to say Legal tax minimisation.
However even legal tax minimisation can be problematical. Using schemes that are legal does not make them moral. And as as HDMC points out, minimisation might be “legal” but still covered under Part IVA and therefore illegal.
Bottom-ofthe-harbour schemes were initially legal (although clearly immoral) until retrospective legislation caught them. I think that offshore havens are in the same category.

I disagree strongly by comments such as these:

Quote

Tax should never be a 'moral' issue – it is a legal impost, set out by the state. Firms and individuals should pay what is required to by law – and not a penny more as it is tax, not a charitable donation - and if they then fail to do this, they should be prosecuted.

Nigel Green, CEO deVere group
http://www.biz-works...t-a-moral-issue

Whilst I do agree with the Law professor Zoe Prebble:

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A legal/illegal test cannot determine questions of morality. Others who aver that tax avoidance is moral base their claims on four assumptions: that taxpayers have a moral right to their pre-tax income; that avoidance is a victimless activity; that the immorality of evasion is derived solely from its illegality (and therefore that avoidance, which has the same factual matrix, is moral); and that morality is wholly independent of the law. These assumptions are mistaken. Evasion is immoral in a deep sense, not simply as malum prohibitum.

http://papers.ssrn.c...ract_id=1650363


The question is how to put morality back into tax law or tax payments. I am not forgetting that it might also be immoral for governments to make tax grabs from individuals far in excess of the governments real need for the taxation or a tax which imposes unrealistic burdens on individuals or companies.
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#29 User is offline   Bam 

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Posted 03 June 2013 - 03:23 PM

View Posticey, on 03 June 2013 - 11:05 AM, said:

I used union fees as an example of tax minimisation for the common man.

This isn't really tax minimisation. It is a deductible expense against income earned. If this expense wasn't incurred, after-tax income would actually increase.
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#30 User is offline   icey 

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Posted 03 June 2013 - 05:16 PM

View Postlenxyz, on 03 June 2013 - 01:36 PM, said:

Using schemes that are legal does not make them moral.


For what it's worth, I'm not really comfortable with the above statement. The law is the law, warts, loopholes and all.

I guess some hypothetical scenarios might cause me to change my mind, but I'd happily do (and have done) whatever I could to legally reduce tax.
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#31 User is offline   icey 

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Posted 03 June 2013 - 05:16 PM

View PostBam, on 03 June 2013 - 03:23 PM, said:

This isn't really tax minimisation. It is a deductible expense against income earned. If this expense wasn't incurred, after-tax income would actually increase.


And it is just so with negative gearing. No investment property, no loan and no hefty interest expense to offset income generated.

Tax is reduced as a result of paying optional (or mandatory if that's still legal) union fees, and reduced from incurring interest charges for an optional investment property.
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#32 User is offline   icey 

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Posted 03 June 2013 - 05:18 PM

View PostHDMC, on 03 June 2013 - 11:45 AM, said:

Part IVA is designed to address the practice of utilising a scheme solely for the purpose of minimising tax - legally or not.

Union dues definitely wouldn't come under scrutiny.


Part IVA is exactly the provision/rule change I was thinking of with it's reference to a "dominant purpose of avoiding tax".

Payment of union fees (and many other ways to minimise tax) do not have a "dominant purpose of avoiding tax".
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#33 User is offline   Bam 

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Posted 03 June 2013 - 08:31 PM

View Posticey, on 03 June 2013 - 05:16 PM, said:

And it is just so with negative gearing. No investment property, no loan and no hefty interest expense to offset income generated.

Negative gearing is fundamentally different and you know this.

Negative gearing is just a tax arrangement for discretionary investments that can easily be abolished or replaced by different taxation arrangements. Because it is discretionary, the money can be moved elsewhere if it produces better returns or tax benefits.

Tools of the trade, textbooks and course fees for students are expenses against primary employment income and cannot be avoided easily. Union dues are somewhat more discretionary, but are nevertheless a legitimate expense against employment income for those who choose to pay them.
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#34 User is offline   lenxyz 

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Posted 03 June 2013 - 11:56 PM

View PostBam, on 03 June 2013 - 03:23 PM, said:

This isn't really tax minimisation. It is a deductible expense against income earned. If this expense wasn't incurred, after-tax income would actually increase.


Not all deductible expenses against income are the same.
What about the those professionals who attend conferences near the best golf courses or the best European ski slopes?
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#35 User is offline   icey 

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Posted 04 June 2013 - 01:19 AM

View PostBam, on 03 June 2013 - 08:31 PM, said:

Quote

icey, on 03 June 2013 - 05:16 PM, said:

And it is just so with negative gearing. No investment property, no loan and no hefty interest expense to offset income generated.


Negative gearing is fundamentally different and you know this.

Negative gearing is just a tax arrangement for discretionary investments that can easily be abolished or replaced by different taxation arrangements. Because it is discretionary, the money can be moved elsewhere if it produces better returns or tax benefits.


View PostBam, on 03 June 2013 - 08:31 PM, said:

Tools of the trade, textbooks and course fees for students are expenses against primary employment income and cannot be avoided easily. Union dues are somewhat more discretionary, but are nevertheless a legitimate expense against employment income for those who choose to pay them.


For crying out aloud, interest on an investment property is also a "legitimate expense against (employment) income for those who choose to pay them".

Have no idea about any fundamental difference with negative gearing. Perhaps I did not follow a relevant thread on this site.
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#36 User is offline   Bam 

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Posted 04 June 2013 - 07:56 AM

View Posticey, on 04 June 2013 - 01:19 AM, said:

For crying out aloud, interest on an investment property is also a "legitimate expense against (employment) income for those who choose to pay them".

Have no idea about any fundamental difference with negative gearing. Perhaps I did not follow a relevant thread on this site.

Negative gearing is discretionary. Primary income from employment is not.

Choice. No choice.

Get it?
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#37 User is offline   icey 

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Posted 04 June 2013 - 07:20 PM

View PostBam, on 04 June 2013 - 07:56 AM, said:

Choice. No choice.

Get it?


I get the message but fail to see any point. An expense is an expense be it optional or not.
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#38 User is offline   Bam 

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Posted 05 June 2013 - 08:33 AM

View Posticey, on 04 June 2013 - 07:20 PM, said:

I get the message but fail to see any point. An expense is an expense be it optional or not.

And yet you're the one that preaches about "tax minimisation". :rolleyes:

If you're going to be wilfully ignorant that's not my problem.
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