Forum Replies Created
I like houses, mainly because I think familys are better payers than single people who don’t have children. Saying that, you can do both, just realise you might find a higher % of take backs with units.
Rgds.
Lucifer_auOkay look at it this way – I buy a newspaper for reading the latest news. If I am a employee and I buy it, I do not get to claim it (unless I’m a jurno), however if I own a business, my business does get to claim it, as it is providing me with information that is needed to run my business.
Lets say I own two cars. Now as an individual I can’t claim my car off tax (unless I’m a delivery driver/courier, and if I was I could only claim one vehicle), however if I own a company, the company needs two cars (and so the company claims them). If one was a luxury car, well that’s for directors (me!) and if one was a station wagon well that’s for moving goods, so a total tax deduction.
If say I rent a house, well I of course can’t claim any off the rent of my house. However if I am a business I could easily claim an office (spare bedroom), lounge area (entertaining clients and having meetings) and kitchen/bthroom (employee eatery and restroom).
Computers are another one (you can’t claim them, but your company can). Even personal stereos you can claim (listening to audio programs), as education services and courses. It isn’t hard to figure out how an item could be deducted. Of course you should always try and make a cash profit (oterwise whats the point!), but when it comes to tax, try and turn all those things into legitimate business expenses.
Rgds.
Lucifer_auNo, you can only buy it form his website: http://www.gatherumgoss.com it costs approx.
Sorry about that (thinking of another audio program – it is worth it though! – Thanks Chan$).
Rgds.
Lucifer_auUmm the answer is yes you can Henry (simply form a company)…
Of course you don’t actually pay yourself a ‘full’ salary (say $45K), rather you turn you personal expenses into company exepenses, and then pay yourself the left over amount. You of course want to keep as much money in the company (unless you want to buy an PPOR, etc), rather than paying yourself a high salary/income.
Rgds.
Lucifer_au>”Don’t Australian shareholder employees pay provisional tax exactly the same as individual sole traders do?”
Perhaps (I’m not sure what your question is though…???). But anyway, a company will NEVER, EVER pay more than 30% tax rate (and thats after all tax deductible expenses and after paying out employees (i.e. you) up to $20K per employee@ 17% tax rate). A sole trader though could (and do) pay up to 48.5% in tax.
Heres what happens to privately held company in regards to taxation, you and your family (were applicable) become employees of your company: Earn-> Turn all your personal expense into company expense -> Pay each employee $6K (0% tax rate) -> Pay each employee $20K 1(7% tax rate) -> Pay shareholders 30% dividend (no tax payable, as the company has paid it).
Of course you might ‘run out of money’ (on paper) before you can pay all your employs $6K so , then you pay 0% tax, or say one family member gets up to $20K (the rest are on $6K paying no tax). Well then you pay 17% tax on the $20,000, which means your yearly tax bill will be $3,400 for your hole family.>”A Sole Trader can claim the same expenses as a company as far as I know.”
They can claim some expenses, but they are limited in a number of areas, also sole traders operate under unlimited liability, so if you get sued all your assets are inc. in a court case (so family home, etc). Under a company structure you and the companies assets are separated, so if you are sued you don’t lose your assets.
Another point is that if you have two cars, both can go into the company (and be depreciated), but if you are a sole trader the ATO will only give you a tax break for one. Also you might have 2 kids, so all your mobile phones (4) go onto the company, while if you are a sole trader you can only claim one. Did you know as a company you can expense meals for your employees at your office? With a sole trader you cannot.
>”Companies have many advantages but do have higher compliance costs than sole traders. A sole trader in a parallel business with a company will make a slightly higher before tax profit because of this.”
$800 to start up, $200 to run per yr. Of course you can deduct it all off your tax.
>”Operating under a company makes no difference to whether a client lunch is tax deductible or not”
As I said you can claim for so much more than a sole employee – for example say I am the chief salesman of my company, they decide gave me a free trip for reaching my bonuses (100% deduction for the whole trip – Everything!!!). You could say because a family member does our books you have to send her to Hawaii to attend an international conference on taxation… Again 100% tax write off. And that holiday was taken with PRE-Tax dollars. So you earn it then you spend it, while an employee has to earn->tax->holiday. I know which I would rather.
>”If you are paying tax, smile – You made a profit – If you are paying heaps of tax, smile harder, you made a BIG profit”
If you are paying more than 30% tax, you are a moron. Look tax is your biggest expense, and on average the gov. takes from everyone (everyone!) approx. 50% of their income (it doesn’t matter wether you are on the top pay scale or the lowest, they make it up with GST, junk taxes, etc).
So the Gov. takes 50% of your income, tell me how hard is it to invest after the gov. has taken it’s 50% out?? It basically haves the money you have for investing. Thats why it is so hard for young people to get into housing… Because the gov. takes their cut first and then these people have to live on the rest (which is 50% of their income), and so cannot save for a deposit. So why do you want to pay 50% of your income to the government??? What – so they can keep on some extra public servants who haven’t actually done any work (they sat in an empty office!) for 9yrs!!! And people wonder why I hate paying tax… (well I don’t pay that much, but I still hate paying a $1 more than I have too).
In a famous tax battle a judge remarked, “You are not required to pay $1 more tax, than you are legally required to”. I take that motto to heart.
Rgds.
Lucifer_auI know a company can claim HECS debt as well as other education fees (upskilling employees)…
“It may not be significant (as it would be hard to justify), nevertheless something is better than nothing.”
Also as skippy girl mentioned thats for unearned income, simply make them do some odd jobs and then it’s normal tax scales which is- $0-$6K = 0% tax rate; $6K-$20K = 17% tax rate. Thats not too bad at all, all so this dosen’t inc. the new reduced income tax rates (thxs to this year budget – thankyou Liberal!).
Rgds.
Lucifer_auWhen you say a “trustfund” what do you mean??? There are no legal entites that are “trust funds”.
I would recommend you set up a trust and appoint your comany as the trustee, as this adds an extra layer of legal protection.
In regards to what type of trust (family, share, etc) to use, you have to expalin your strategy – will you be buying buy and holds or negativ;ly geared property, or even wraps.
Rgds.
Lucifer_auLove interest only! I couldn’t are if the banks only offered I.O. loans!!
There are many finance options you can use, for example if you have a high income and own your own home (with a mortgage on it) you can take advantage of a tax loophole to pay your mortgage off while still getting the full benefit of tax deductability.
In the end it depends on your plan??? Buy and Hold, Reno, Wraps, etc.
Rgds.
Lucifer_auI do the 11 second solution, get the property and then try and buy it for nothing down. Also 6% is pretty poor.
Rgds.
Lucifer_auI would say vampire for a couple of reasons: 1) I stay up till the wee hours of the morn; 2) I want to see BLOOD!!! not boody parts!
Rgds.
Lucifer_auIt’s a bit of a stretch. I don’t deal with houses this expensive so I can’t comment, but if the house is a nice one it could be potentially worth it.
Rgds.
Lucifer_auDo you wish to invest there??? In which case unless you have a large amount of money and are willing to travel and set up corporations, I would encourage you to buy at least one here so you can get a feeling for investing (rather than trying to chase low interest rates). Also travelling costs could kill any rental return.
Also you will have to set up a corpoation and will have to study tax agreements between the US and Aust, if you want to bring $$$ back to Aust.
Rgds.
Lucifer_auYes it will, I need your income to tell you exactly how much.
At $70K income, having $7,500 CC will reduce your borrowing potnetial by approx. $40K, with $15K it gets reduced by another $40K, though this is a generalisation, and of course your individual details could be very different from my assumptions.
Rgds.
Lucifer_auIn this case you are the appointer, the company is the trustee and you are a benficiary.
Rgds.
Lucifer_auInteresting wrappack!
(Good to see you approached the layer rather than the victim, I’m mean widow (L0L @ kay henry) – only ribbing u wrappack ([tongue][wink2]).
The public trustee is just another bureaucracy!!
I try and avoid the State Gov. like the plague!!Anyway I guess the biggest prob. was finding out their assets – for example did they live in Mosman or Blue Mountains. It would be good if you could target specific areas….
Keep this up wrappack, and I’m sure you’ll one day get a phone call: “are you the guy who buys dead peoples houses??”[blink][laughing]
Rgds.
Lucifer_auKnowing how TerryW plays (at least on the forums) is, I would say Yes!!!
Rgds.
Lucifer_auPlease drop, please drop, please drop… I want to see blood on the streets!!!
Rgds.
Lucifer_auI would want to make at least $40. Also can you afford to have it non-performing for at least a couple of weeks (if you can’t don’t do it…). Also how mauch are you putting in for a deposit???
Rgds.
Lucifer_auNo I’m not. All I’m saying is that high consumer spending has, for a large part, fueled high growth. You wanted to know why the media places such a large emphasis on interest rates, and I told you a very likely reason.
Wether debt is “good” or “bad”, from an economic point of view is irrelevant. It’s just a factor in the economy – one that can lead to higher economic growth and one that can constrain economic growth depending on the economic cycle.
As for people digging them selves into debt – unfortantly it’s not my problem. I cannot fix the laws to outlaw credit cards, but nor would I want too. Because without debt instruments I wouldn’t control a portfolio of this size, without debt. Yes credit is dangerous when used unwisely, but in the end I wouldn’t be where I am today without it.
Rgds.
Lucifer_auBecareful, you will probably need an independent valuation done to satisfy the ATO. The tend to look quite closely at all deals that aren’t at arms length.
Rgds.
Lucifer_au
