any ideas how to lower tax short term?

hi all,

i'm wanting to hold out ideally from a property purchase in nsw/vic for a year or two due to current market conditions and was wanting to know is there any shorter term ideas on how to lower my tax? from the 45% tax rate, income comes from a small business run from a family trust.

would it just be best to use a bucket company to work as a bank for 1-2 years for this additional money? and then withdraw it in the years i've made further property purchases? (negative gearing)

Cheers, Elives

 

The money channelled into the bucket company would I assume be treated as profit and taxed at the company rate and when you pay it to yourself as dividends it will be taxed at your marginal rate minus franking credits. Delays the tax, doesn't really reduce it.

 

Personal tax advice is the only recommendation I would mention. Forum posts for a specific issue like this wont be helpful

 

not enough information on your situation to determine what strategies are appropriate

 

delay is most likely a better word to use then reduced, i think this may be a short term solution cheers

 

Reduce income and or increase deductible expenses are the only 2 broad options

 

Deferring income in the pre-election period post-pandemic may be a concern. The deferral may see a higher future tax rate or levy. Someone will need to pay for this pandemic and the handouts. Higher taxes for higher income earners seems inevitable.

I regularly explain to taxpayers (2 yesterday !) that the MAX CGT rate is 24.5% of the notional profit. So its a low tax rate. Yes its possibly a large number but the net equity will be larger. Three times perhaps. To make a vendor fell better its wise to consider the equity benefit calculations

Sale prices LESS

• Tax payable on profit aftre any strategies to save a little
• Discharge of bank loan
• Selling costs

and consider what this value is. The tax benefits can be a head cleaner. eg Lets say that number if $400K and allows a full discharge of the PPOR loan (or offset) then the PRE-TAX benefit may be a cashflow saving. Then they may explore debt recycling to invest in a deductible manner and so on.

One of the common ways to save tax when selling is to get the CGT calc spot on. Get it wrong and you could face overpaying (and never know it) or underpaying and later being detected and being required to pay the tax without the cash set aside. Common cost for use to discuss, review and consider CGT calcs is $220-$450 in many cases. I cant say I see "correct calculations"often. I usually find some change or even a choice.

 

many factors can impact on the CGT calc and agree something many get wrong