Common Tax Planning

Strategies Explained:
A holistic approach to tax efficient wealth
building.
Travis Morien
Compass Financial Planners Pty
Ltd
08 9332 0544
http://www.travismorien.com

Basic principles

There are many perfectly legal and socially

acceptable ways to increase your wealth in a
tax efficient manner. Some of these methods
are very powerful. Legitimate methods of
increasing your tax efficiency are called tax
planning.
Methods that are unlawful are categorised
under two different labels:

Tax avoidance is where you set up contrived

accounting structures and strategies that abuse a
loophole so you can claim large tax deductions or
take advantage of some benefit that was never
intended to be used in such a way.
Tax evasion is where you deliberately try to hide
income from the Tax Office, by various methods
including secret bank accounts, not recording cash
transactions, cooking the books etc.

The focus of tax planning

Tax planning should only ever be done with a view to

increasing your total wealth.
There are some people that enter into all sorts of
dubious arrangements in order to obtain a tax
deduction, including trying to minimise their income.
Minimising your income is silly, what you want to do
is increase your assets and/or after tax income .
Some popular tax planning strategies are highly
effective at reducing your tax, but produce little
benefit in terms of wealth creation. Some strategies
actually make you worse off, either immediately or in
the long term.
Hence, tax planning is just a subset of overall
financial planning, which needs to take into account
investment strategy, retirement planning, wealth
building etc.

Legality and ethics

There is always a grey area between tax planning, tax

avoidance and tax evasion, and the Australian Tax Office
has a surprising amount of discretion to decide where the
boundaries lie.
It should be remembered that just because some
expert says it is ok, doesnt mean that it is ok. Also
remember that just because a tax adviser openly
advertises the strategy in a newspaper doesnt mean the
Australian Tax Office has approved the scheme. There
have been many high profile prosecutions over the years
and the fact that everyone does it makes the ATO more
likely to shut it down.
In other words, be careful about listening to advisers that
seem to recommend too good to be true strategies like
clever loopholes and novel types of trust that are
supposedly a closely guarded secret of the rich.
Serious penalties including huge fines and jail terms may
apply if you do something illegal. Blaming your advisor
usually wont get you off the hook.

The Secrets of the Super

Rich

Contrary to what many poor and middle class

people have been led to believe, there really are no
secret techniques used by the wealthy that enable
them to get through life paying little or no tax.
Wealthy people often employ very good advisors but
strategies used by the wealthy are almost always the
same simple strategies mentioned in this presentation.
The difference is that a skilled advisor knows how to
best combine these strategies for overall results.
People generally get wealthy not by using some flashy
secret technique, but because they were good at
building a business or investing wisely.
Gurus promoting the idea of secrets are usually
conmen seeking to dupe the poor and middle class, you
generally dont find millionaires lining up to attend
$10,000 seminars advertised in the newspaper. Most
wealthy people that I know scoff at such seminars.

There are many different types

of tax planning strategies:

Strategies for obtaining tax deductions

Strategies for obtaining tax offsets (credits)
Strategies for moving income away from an
entity paying a high rate of tax to an entity
paying a lower rate of tax.
Strategies for moving profits and losses
between tax years, either to defer tax or take
advantage of a more favourable tax rate.
Strategies for reducing the amount of
assessable capital gains from an investment
sold at a profit.

Deductions vs offsets

When you claim a tax deduction for

something, you obtain a tax benefit equal to
the amount of tax you would have paid on
that income at your tax rate. For example, if
you are on the top marginal tax rate of
48.5%, claiming a $100 Tax deduction will
produce a tax benefit of $48.50.
An offset is a credit against tax payable. If
you are entitled to a $100 tax offset, your
total tax bill will be reduced by the full $100.

Moving income between

entities on different tax rates

The term entity has a very broad meaning

and can include different people, companies
and superannuation funds.
A common and very simple example of this is
when a couple make income producing
investments in the name of the partner on the
lower tax rate, often a non-employed spouse.
More complex strategies may involve
structures like a discretionary trust, the
trustee may be able to choose the best way to
distribute income between several
beneficiaries which may include people or
companies.

Moving income between tax

years
There are many ways to move income between

tax years. If you are working now but likely not

to be working in a few years (retired, holiday, ill
etc), then you may be on a lower tax rate then.
It might be sensible to defer the sale of any
assets trading at a capital gain until the lower
income year.
Other times, people may wish to bring forward
income if they expect a substantial increase in
taxable income in the future.
A powerful way to move income from this tax
year into a tax year that may be many years
from now is to invest in an agribusiness scheme.

More tax efficient investing

One of the biggest expenses to a successful

investor is capital gains tax (CGT).
Every time you sell an eligible asset at a
profit, you need to remit part of that gain to
the Australian Tax Office as CGT.
A discount of 50% applies if you hold the
asset for more than one year, so medium to
long term investments are vastly more tax
efficient than shorter term trades.
Many people overlook the fact that if you
defer the realisation of a capital gain you get
to keep your unrealised tax debt in the
market earning you dividends. There is
actually a small but significant increase in
your effective rate of return if you can keep
portfolio turnover down.

Managed funds and tax

It pays to checkefficiency
on the tax efficiency of any

managed fund you are thinking of investing in.

Some funds have a relatively low portfolio
turnover and tend to actively manage their
taxable distributions to reduce the tax burden to
their investors.
Other funds trade excessively, and make huge
distributions every year, much of it nondiscountable short term capital gains.
Obtaining such information isnt easy if you are
a general member of the public, this is where a
good financial advisor can be of assistance.

Tax offsets

There are so many different tax offsets that

you should talk to an accountant to see
which ones you can claim.
Common ones include franking credits on
share dividends, low income tax offset,
Senior Australians Tax Offset, spouse
superannuation contributions offset,
personal super contributions offset,
dependent spouse offset, family tax benefits
part A and B, baby bonus and many more.

The three tax systems of

Australia

Personal income is taxed in Australia on a

marginal tax rate system. The higher your
income, the higher the average rate of tax you
pay. Capital gains on assets held more than one
year are taxed at half of your marginal tax rate.
Corporations in Australia pay a flat rate of tax on
income of 30%. No discounts apply to capital
gains.
Superannuation funds pay tax of 15% on income
and 10% on long term capital gains. A
surcharge may also apply for contributions for
high income earners.
Arguably GST is counted as a fourth tax system,
but is outside the scope of this discussion as it
has limited applicability to investment
strategies.

Personal tax rates for Australian residents

2004/2005
Taxable income

Tax payable*

$0 to $6,000

Nil

$6,001 to
$21,600
$21,601 to
$58,000
$58,001 to
$70,000
$70,000 plus

$0 + 17% of excess over

$6,000
$2,652 + 30% of excess
over $21,600
$13,572 + 42% of excess
over $58,000
$18,612 + 47% of excess
over $70,000

* Medicare levy of 1.5% may also apply

Personal tax system contd

Contrary to what many people think, your marginal tax

rate is not equal to your average tax rate.
For example, if your income is $80,000, you will be on
the top marginal tax rate. Including Medicare Levy, the
marginal tax rate of such a taxpayer is 48.5%.
The amount of tax actually paid by someone earning
$80,000 is $24,512 including Medicare Levy. This
works out to an effective tax rate of about 31%. The
top marginal tax rate only applies on the last $10,000
of income, though of course any additional income
would be taxed at 48.5% and most tax planning that
we do will be on dollars that would be taxed at the
highest rate.
For long term capital gains (asset held more than one
year), the capital gain profit is first discounted by 50%
and then added to assessable income at marginal tax
rates.

Companies

Companies pay tax at a flat rate of 30%. This applies to

both income and capital gains.
High income investors often buy investments in the
name of a Pty Ltd company so they will be taxed at a
maximum 30% on income, though investors need to
take account of the fact that capital gains will always be
taxed at 30%, rather than the effective top rate of
24.25% paid on long term gains earned in the name of a
person.
Companies are distinct tax entities recognised by the
Tax Office, and can retain income and assets in their
own name and need to lodge their own tax returns.
A common tax planning strategy is to retain and
reinvest income in a company, only drawing a dividend
when the shareholders tax bracket equals 30% or less.
Companies can be used as an efficient parking vehicle
to defer personal income tax.

Trusts and other structures

Unlike a person, company or a superannuation fund,

trusts are not entities that pay tax. A trust is a
fiduciarial obligation between a trustee and the
beneficiaries.
Investments can be made in the name of a trust, but
all income and capital gains must be distributed to
beneficiaries every year or the trustee will pay tax at
the top marginal tax rate on undistributed income.
A fixed trust is set up so that all beneficiaries get a
fixed entitlement to the income, capital gains and
capital of the trust. Discretionary trusts give the
trustee a lot of flexibility in determining how to make
distributions and offer significant tax planning
opportunities.
Beneficiaries of trusts can be people, companies,
partnerships and other trusts.

Superannuation

Although the superannuation system is

complicated and many people do not trust it,
super is still one of the most tax efficient
ways to build wealth.
You only pay 15% tax on income in a super
fund and the capital gains tax rate on assets
held for more than a year is 10%.
Another advantage of super is that this is one
of the most difficult assets for a creditor to
get his hands on, so superannuation is ideally
suited to business owners and professionals
wanting a protected place to store their long
term savings.

Reasonable benefits limits

Superannuation is an excellent savings vehicle for long

term retirement savings. The tax efficiency and the asset
protection characteristics are so good that limits have
been introduced that stop very wealthy people from
taking too much advantage of it.
A reasonable benefits limit (RBL) is the most one can
take out of super while still obtaining maximum tax
concessions.
The lump sum RBL is $619,223 in the 2004/05 tax year.
This figure is indexed each year with inflation.
You can access a higher RBL, the pension RBL by putting
at least half your benefit into certain complying income
streams. The pension RBL is $1,238,440 in 2004/05. The
pension RBL is higher to encourage people to convert
their super into pensions that will last at least for their life
expectancy, rather than withdrawing it and spending it in
a short period of time.

Withdrawing from super lump

sums

There are various components of super which are all taxed

differently (well gloss over the complexities in this
presentation), the most common components are Pre 83,
Post 83 and Undeducted.
5% of Pre 83 money withdrawn from a super fund is taxed at
marginal tax rates. 95% is tax free.
In the 2004/05 tax year, you can withdraw $123,808 of
post 83 money from a superannuation fund before having
to pay any tax on this lump sum. This figure is indexed
upwards every year. The balance of lump sum withdrawals
is taxed at 15% (+ 1.5% Medicare), subject to reasonable
benefits limits.
Undeducted components can be withdrawn from super tax
free.
Pre and Post 83 untaxed amounts withdrawn in excess of
your reasonable benefit limit are taxed at 47% plus
Medicare, post 83 taxed amounts drawn as a lump sum in
excess of your RBL are taxed at 38%.

Withdrawing from super income

streams

Income streams are taxed at marginal tax rates,

minus a 15% superannuation pension tax offset.
The earnings within the fund itself are tax free once
the fund begins paying an income stream.
Undeducted components create a deductible
amount of the income stream that is tax exempt.
The size of the deductible component varies
depending on the type of income stream, the term
of the payments and your life expectancy.
Pre and Post 83 money withdrawn in the form of an
income stream that is in excess of the Reasonable
Benefits Limit is taxed at normal marginal tax
rates, but doesnt attract the 15% pension tax
offset.

Superannuation contributions
surcharge

If your adjusted taxable income (ATI) exceeds

certain thresholds, an additional tax is paid on
contributions to superannuation. This tax does
not affect earnings, just contributions.
Adjusted taxable income is your total
remuneration, which includes salary,
superannuation contributions and fringe
benefits.
If your ATI exceeds $99,710 (2004/05 tax year,
figure is indexed annually), you may be liable to
pay some surcharge on your contributions. This
surcharge rate increases from 0 to 14.5% when
your ATI reaches $121,075. Below $94,691
surcharge is zero, above $121,075 it is 14.5%. If
your ATI is inside this range, a formula will apply.

Superannuation contributions
surcharge contd

Surcharge rate = (ATI - $99,710)/1,709.2.

(in the 2004/05 tax year)
For example, if your ATI is $110,000, your
surcharge rate will be 6.02036%. Note
that surcharge rates are always worked
out to 5 decimal places.
If your remuneration was $85,000 salary
plus $25,000 super, youd pay 6.02036%
x $25,000 = $1,505.09 in surcharge, in
addition to the $3,750 (15% x $25,000)
you would have paid anyway in
contributions tax.

Strategies for obtaining tax

deductions:

Salary packaging or direct deductions of

business expenses (if eligible).
Claiming work, transport and some selfeducation expenses as deductions.
Negative gearing (in fact, any gearing).
Deductions associated with property
(depreciation allowances etc).
Agribusiness.

Salary packaging

A salary sacrifice arrangement is a deal

agreed to between an employee and an
employer to swap some cash salary for
another type of non-cash benefit.
You would do this because taking
remuneration in the form of a non-cash
benefit often means you dont have to pay
income tax on that benefit.
When you negotiate a remuneration
scheme with an employer that includes
salary sacrifice, this is called a salary
package.

Salary packaging contd

You can salary package virtually anything,

but to stop abusive arrangements there is
an extra tax paid by the employer called
Fringe Benefits Tax. (FBT)
The amount of FBT paid on items that
attract the full rate of FBT is calculated such
that the employer pays the same amount of
tax as if you had received it yourself and
paid the top marginal tax rate (48.5%).
Naturally, the employer will have to pass
this cost on to you and so you would gain
no benefit on many packaged items.

Salary packaging contd

Some benefits attract no FBT, some attract a

partial amount of FBT and some the full rate of
FBT. There is a tax saving if you take FBT
exempt items or items that attract FBT at a
concessional rate.
Common FBT exempt benefits:
superannuation, employee share schemes,
laptop computers, mobile phones and many
benefits that would be otherwise deductible.
The most commonly packaged benefit that
attracts a concessional rate of FBT is a car.
Depending on what you use the car for and
how far you drive it every year, there can be a
substantial tax saving for salary packaging a
car, usually with some sort of lease
arrangement.

Maximum deductible
contributions

Age
An employer can only
< 35
package a limited
amount of income into 35
superannuation and
claim a tax deduction on 49
it. This limit is called the 50
Age Based Limit, and the
Age Based Limit, and the
maximum contribution
on which deductions can
be claimed is called a
Maximum Deductible
Contribution (MDC).

ABL
$13,934
$38,702

MDC*
$16,912
$49,936

$94,980 $126,30
6

* Self employed and unsupported

people can claim a tax deduction on
100% of the first $5,000 contributed
and 75% of the balance. Employers
can claim a 100% tax deduction on
all contributions for their employees
up to the employees age based limit.

Income splitting

Income splitting is a very common strategy and is

often quite easy to implement.
If you can make investments in the name of a
spouse on a lower marginal tax rate (for example,
buy shares, managed funds or invest in term
deposits) then obviously less tax will be paid than if
investments are made in the name of the person on
the higher tax rate.
Discretionary trusts allow a trustee to split income in
a very flexible manner, being able to potentially
choose from a number of beneficiaries.
Note that there are special high tax rates for minors
that receive unearned income, these tax rates run
as high as 66%. The tax free threshold for a person
under 18 years is only $416, but with the low income
tax offset it effectively rises to about $643.

Income splitting continued

You can income split by investing in the
name of a person on a lower marginal
tax rate or, provided you have sufficient
investment income to make paying the
extra accounting costs worthwhile, you
can invest via a discretionary trust that
allows you to decide every year who gets
income and capital gains distributions.

Negative gearing

Gearing is the practice of borrowing money for

investments like shares or property. Negative
gearing is where the amount of income received
from the investment is less than the interest expense.
You claim the shortfall as a tax deduction. You can
also do positive gearing where the income exceeds
the interest and if you are able to balance the cost it
would be called neutral gearing.
Negative gearing is particularly tax efficient because
while the interest shortfall is 100% tax deductible,
the capital gain (assuming there is one) will only ever
be taxed at half your marginal tax rate if you hold for
more than one year. When you run the numbers on
this, the amount of return you need on your growth
investments is less in a simple percentage term than
the interest rate on your loan.

Negative gearing continued

Negative gearing is not a tax planning strategy

as such, it is a tax efficient wealth building
strategy.
It is important to note that when you borrow to
invest you introduce extra risks related to your
ability to service the debt and a greater level
of exposure to market risk due to the larger
portfolio. Some forms of borrowing introduce
other risks as well, like the risk of margin calls.
Unless you borrow vast amounts of money it is
unlikely that the size of the tax deductions will
be large enough to make a serious dent on
your assessable income. That is why I dont
classify this as a pure tax planning strategy.

Gearing and risk

Although the profits can be fantastic, the risks of

gearing should not be ignored.
Borrowing $100,000 to invest means you have
$100,000 at risk in the market. If there is a
decline of 30%, and declines of this size are
common in both shares and property, you would
lose $30,000. If you need to sell the investment
you may end up with a debt you cant afford to
pay back.
There is also interest rate risk, if rates rise
significantly people can get themselves in lots of
trouble if they have borrowed too much.
It is important to always consider whether you
are in any position to accept the chance of losses
before you invest.

Pre-paying interest

It is legal to claim a tax deduction on expenses

for interest as much as 13 months ahead.
A common strategy that people use toward the
end of the financial year is to pre-pay interest to
a lender. This results in bringing forward tax
deductions that would otherwise be incurred in
the next financial year (but since the dividends
from the investment havent been received they
wont add to assessable income until next year).
Most lenders that allow you to pre-pay interest
also give a discount on the interest for doing so,
so not only do you save tax, you also pay less
interest.

Capitalising interest

Some lenders enable you to capitalise

the interest, which means they just keep
adding the interest to the account balance
owing (up to an approved credit limit).
The loan balance will keep growing,
increasing your tax deductions. You can
use the cash to either buy more assets or
to pay off another loan with a higher
interest rate or a non-deductible personal
loan.
Capitalising interest is sometimes called
double negative gearing.

Tax deductible managed

investment schemes (MISs)

Some investments in primary

production schemes are tax deductible.
Normally these types of investment
are in the agriculture or film industries,
though there are all sorts of other
schemes.
You claim a tax deduction of up to
100% of your initial application money,
but when the project matures youll be
taxed on 100% of the return.

Example: Agribusiness

The most common type of tax deductible

investment is tree farming (silviculture).
There are many crops available including
eucalyptus hardwood, pine, sandalwood,
paulownia and a number of other exotic
timbers.
Also popular are horticultural crops
ranging from citrus and tropical fruits
through to olives, almonds, grapes and
some other crops like wildflowers,
ginseng, coffee and truffles.

Hardwood tree farming

The most popular type of agribusiness
scheme, and arguably the least risky, is
eucalyptus tree farming. There are longer
term projects (about 20 years) where the wood
is grown for sawlog timber and veneer, and
medium term projects (just over 10 years),
where the wood is grown for chipping for the
production of paper.
This sector does in fact receive a high degree
of government support, as it presents a more
environmentally friendly alternative to logging
native forests and creates valuable export
revenue and employment in rural areas.

How a typical blue gum project

works

Claim a 100% tax deduction for planting expenses

(about $5,000 - $8,000 per hectare is common).
The blue gums grow for 10 12 years, the project
manager looks after the trees and then arranges
the harvest. Depending on the up-front payments,
there may also be deductible ongoing management
fees.
When the wood is harvested, you receive the
proceeds as fully taxable income.

Investment characteristics of
agribusiness

No liquidity. You usually have to wait more than ten years

for a return (though some projects are shorter term).
Moderately high risk: fire, flood, currency movements,
price movements of the commodity.
Return data is often hard to find, but a good agribusiness
project should produce returns at least as high as
equities.
Not really tax efficient if you are on the same or a higher
marginal tax rate when you get the harvest. Ideally you
would want to invest in them while you are earning good
money and paying tax at the top marginal tax rate, but
retired in the year of the harvest. This is an example of
moving income from one tax year to another to take
advantage of lower marginal tax rates.

Mortgage accelerator
strategy
Interest incurred on a loan to buy into an

agribusiness scheme is usually tax

deductible.
If you have non-deductible debts their after
tax cost can be nearly twice as much as
deductible debts, for an investor paying the
48.5% marginal tax rate.
A common strategy is to take out a loan for
an agribusiness investment and use the tax
refund to pay off a non-deductible debt. The
after tax interest bill is basically the same as
before except now you have an agribusiness
investment and future cash flow advantages.

Dodgy schemes and the ATO

Tax effective investments have become notorious in the

last few years following a widely publicised crackdown by the
Australian Tax Office (ATO).
Many schemes were put together by accountants and
lawyers purely for the tax deductions. Various creative
accounting tricks were employed so investors were able to
claim tax deductions several times larger than the amount
actually invested!
As a profit was made just from the tax dodge, the crop was
just a sideshow. Far greater effort was put into finding ways
to increase the tax deductions than to research the
commercial viability of the crop. Result: too many tea trees
were planted, the price of tea tree oil fell below harvest and
extraction costs, some blue gum plantations were made on
cheap marginal land where the trees didnt grow well. Many
other crops simply failed to meet prospectus projections.
The ATO cracked down on these, and disallowed tax
deductions. There is now a product ruling system where
the ATO certify that they will allow the tax deduction on
approved projects provided they comply with the ATOs
conditions.

How to get out of paying the

superannuation contributions
surcharge

High income earners that salary sacrifice a

significant amount of income to
superannuation will find that they are paying
a significant amount of superannuation
contributions surcharge.
By claiming a few tax deductions they may
be able to reduce their adjusted taxable
income to below the $99,710 threshold and
thus no longer have to pay surcharge.
Common deductions claimed include
negative gearing strategies and agribusiness.

When salary packaging a significant amount of

money into superannuation, high income investors
can pay a significant amount of super contributions
surcharge.
If your income is not too far above the upper
surcharge threshold and you are putting a lot of
money into super, the amount of surcharge you can
save by claiming a tax deduction can often come
close to paying for the agribusiness investment!
For some investors taking maximum advantage of
salary packaging as well as agribusiness extremely
high effective rates of return can be achieved due
to the very small net after tax outlays required after
factoring in surcharge and other tax savings.

Timing and netting of capital

gains
If you can hold on to your taxable capital

If you can hold on to your taxable capital

gains as long as possible, you will obtain
a benefit by having that money invested
in the markets. Effectively an unrealised
capital gain contains an interest free
loan from the Australian Tax Office.
The longer you get to hold on to that
gain, the longer youll be able to earn
dividends and further growth on that
money.
Therefore, methods that delay the
realisation of capital gains tax can
produce significant benefits.

Netting capital gains

If you sell an asset at a capital loss, you can only offset

that loss against a capital gain. Generally, you cant
claim a capital loss as a direct tax deduction. Capital
loss credits can be carried forward as long as is
necessary for them to be used up.
Capital gains and losses are netted. Each year you
pay capital gains tax on the total capital gains minus
the total capital losses.
While it is sensible to defer the realisation of capital
gains, the same can not be said of capital losses. In
fact, a capital loss is a valuable asset for tax planning
purposes and if possible should be realised. These
losses can then be used to offset any sales you intend
to make at a profit. By being quick to realise losses
and slow to take profits you can delay the ultimate
paying of capital gains tax for a very long time.
If you still like that particular asset, you could buy it
back a short time later.

Deductible superannuation
contributions

Employees cant claim a tax deduction on their

personal contributions, they must use salary sacrifice.
If you are self employed, or unsupported, you may
be able to claim a tax deduction on some or all of
your superannuation contributions.
A common post-retirement strategy is for people to
liquidate their ordinary investment portfolio and claim
a tax deduction on contributions to superannuation, to
eliminate their capital gains tax liabilities.
The same strategy could be employed to reduce the
tax liability on the harvest from an agribusiness
project.
Note that rules apply specifying who can and can not
make contributions to superannuation, there are a
variety of tests of age and employment activity.

Superannuation cocontributions
This year a new incentive
was introduced to encourage

lower income taxpayers to make voluntary contributions to

their super.
This scheme is called the co-contribution, and involves the
government matching your contributions up to a maximum
of $1,500pa.
The amount of the co-contribution depends on your taxable
income, and is at a maximum for people with income and
reportable fringe benefits below $28,000, reducing by 5c in
the dollar as your income exceeds this, cutting out at
$58,000.
Co-contribution = the lesser of your voluntary contribution
and $1,500 0.05 x ($income&FB - $28,000). If the formula
gives rise to a number below $20, the tax office will pay $20.
The obvious beneficiaries would be lower income
employees, but the main beneficiaries are likely to be parttime working spouses and semi-retired people.
Co-contributions replace the old $100 super contributions
rebate. Obviously this benefit is a lot more generous than
the one it replaces.

One possible downside of tax

planning

Before implementing any tax planning strategy,

you need to consider the costs of doing so. Such
costs include accounting, legal and advisor fees.
The benefits of implementing a sophisticated
strategy may not be worth the bother in terms of
time and money spent on creating and
maintaining the strategy unless you have a fairly
high income and/or a big portfolio. (Especially
when creating tax structures like companies and
trusts.)
On the other hand, there are a number of simple
strategies that can be relatively easily and
cheaply implemented.

Summary

There do exist legal and acceptable methods

for reducing tax, but tax planning should only
ever be of secondary importance behind
wealth/retirement planning.
Some tax planning methods are very powerful,
a combination of negative gearing, salary
packaging and agribusiness can reduce the
amount of tax paid to very low levels, but
sometimes just taking the money and paying
income tax on it is the better long term
strategy.
An accountant and a financial planner can
assist in implementing all of the strategies
mentioned here, plus many others.

Disclaimer:
The material in this presentation does not
represent a recommendation of any
particular security, strategy or investment
product. The author's opinions are subject to
change without notice. Information
contained herein has been obtained from
sources believed to be reliable, but is not
guaranteed. This article is distributed for
educational purposes and should not be
considered investment advice or an offer of
any security for sale. Investors should seek
the advice of their own qualified advisor
before investing in any securities.