How a millionaire pays no income tax

How a millionaire pays no income tax

Meet Tony. He earns more than $1 million a year yet when it comes to tax time his taxable income is just $18,000 meaning he pays no income tax.

How does he do it? Deductions.

 

The article states:

“Tony is a big earner and a big giver. He has given $850,000, which he now claims on tax.”

Tony is generous.
Tony donates nearly 80% of his gross income to charities.

Article continues:

“This is one reason that Tony is in minority – 99 per cent of people who earned more than $1 million remained in the top tax bracket after deductions.”

Marg

 

He donates most of it to charity, did he play rugby and run a go fund me page to fund a lawsuit?

 

Israel Folau, owner of a multimillion dollar property portfolio and until recently the highest-paid rugby player in the world, launched a campaign to have the public fund his aggressive legal campaign against Rugby Australia.

The top six fundraising causes on GoFundMe.

 

Well, he's just a disgusting person. I don't know how people can support him. It's wrong! Just plain wrong!

 

Wow people would rather help a multimillionaire Christian condemn gay people than save a kids life!

 

The article states: "Any donations to registered organisations – even a $2 coin dropped in a charity appeal bucket – can be claimed as a tax deduction."
Don't you need a receipt from the charity to deduct that $2? I didn't think they would give you a receipt for $2 when you dropped a $2 coin into the bucket at a shopping centre. Maybe they do?

The article states: “Tony is a big earner and a big giver. He has given $850,000, which he now claims on tax.”
Is Tony able to setup his own charity and put that $850k in there and he somehow gets a benefit from the charity that he has setup? Expensive cars the charity buys and lets Tony drive, holidays around the world the charity let's Tony take, etc. Somehow I don't think Tony would be so generous just to give 85% of his income to another charity just because he's generous and has too much money.

 

What happened to the shane warn foundation?

 

These articles re millionaires paying no tax come out each year around this time. The articles usually talk about how the millionaire paid their accountant over $1m to pay no tax, however as was well documented during the recent election, those circumstances are usually as a result of an individual going through a tax dispute with the ATO and it is lawyers and barristers at 10 paces.

The other thing to note is that a lot of these "millionaires" wouldn't be PAYG wage earners, but business owners who can control the level of income distributed by their business to them personally.

I had a client who donated $800k to a charity. They had retained profits in their private company and so declared a dividend to fund the amount of the donation. They wouldn't normally have assessable income of $1m, but in this instance declared a dividend and then claimed the donation to reduce their taxable income back to under the highest marginal tax rate and then received a refund of the excess franking credits. In other years, they would only declare a dividend equal to their personal drawings and so in those years wouldn't be a so called "millionaire".

 

Yes, anyone can set up a charity and get tax deductible status (just have to jump through all of the hoops). Providing that the 'charity' distributes at least 30% of its income (IIRC), then it can maintain the tax deductible status. It can pay expenses etc (up to a limit) with an FBT exemption eg school fees, mortgage etc so that the $18k nett income soon becomes $X00,000 fax free.

Couldn't turn a profit from the fund raising events it held so was losing money and couldn't distribute anything to charity - soon became non-compliant.

 

I'd like to start up a Save the Bogan Foundation. Give it 10 years and another property boom and they'll be out of the Druitt and up the coast with their cousins.

 

You could employ your brother to run it, on a high salary, with car allowance of course.

 

Good idea. The admin costs could run a tad high though. Need a fleet of expensive Holden cars . Top of the range stuff.

 

They're all collectors editions now even a 1970's LJ Torana with a dodgy red block and triple SU's.

 

I recall reading what was purported to be an historical document set around 2000 years ago in which some dude was hanging out with 12 other dudes for a few years and..

Hmm, best not go there.

 

From the article: "There were 70 people like Tony, who earned more than $1 million in total income, but lowered their income to less than $18,200 after deductions. That meant they didn’t have to pay any income tax."

Then: "Among the Tonys, the average personal superannuation contribution was $557,500."

And: "Tony spent $50,000 on managing his tax in 2016/17, far more than the typical Australian but far below the average for his cohort ... their average costs of managing tax were a staggering $607,201"

Interesting numbers!

 

the article is implying milionares can make a super contribution of $557k and deduct it!

 

Is that a 3 year brought forward after tax contribution? Or was it due to the sale of a business and rolled into super or an allowance for downsizing be or some other benefit available for the over 60's?

 

I would love to know which charities these are....

 

No the after tax contributions are not deductible.