For most Australians paying tax is right up there with visiting the dentist. It’s necessary, but the experience is rarely pleasant. Clearly no-one wants to pay the ATO more than they’re legally obliged each year. However, the impacts of having an inadequate or incomplete tax minimisation strategy can easily become magnified for individuals with high net worth, be it through their occupation, personal assets, family assets or inheritance, investment income, or any combination of these.
Expert advice matters
Australia’s taxation landscape can be complicated at the best of times. It’s also prone to changing quite regularly. That’s why seeking expert advice is so important to navigate the tax rules and protect what’s rightfully yours. For many years Hill Rogers has worked successfully with high net worth individuals to reduce their tax burdens and plan for potential exposures. By understanding the nuances of Australia’s tax laws and staying up-to-date with the very latest rulings from the ATO, we’re able to specialise in the implementation of everyday steps and strategies to lessen your final tax bill and also avoid costly surprises come June 30.
Things to look for
Of course, everyone’s personal situation is different. That said there are some common areas where we’re consistently able to assist high net worth clients. One of the most significant is simply ensuring you’re fully aware of all the tax concessions available to you each year. Overlook one of these and it could potentially cost you thousands of dollars, either through missed deductions or an increased ATO tax debt. In our experience, some of the more commonly overlooked tax deductions include things like:
- Reinvested dividends
- Rental property expenses
- Job search expenses
- Income protection premiums
- Bad debts.
Things to watch out for
Just as there are opportunities each year, there are also things to be wary of. Tax minimisation schemes are nothing new and often come in a remarkable array of guises. While many are perfectly legitimate, there are inevitably some that are more questionable and could leave you exposed.
Each year the vagaries of the tax rules, both here and abroad, also see many Australians unwittingly fall foul of the authorities and hit with a higher than anticipated tax bill. One such instance surrounds individuals with international stocks in their super funds who, under certain circumstances, can be required to pay high international estate taxes. If you have US stocks, for example, and your total net worth exceeds the exemption threshold (currently around US$5.5 million), your investment is subject to US estate tax when somebody dies – even if you’re an Australian resident with no US connections whatsoever!
Getting the right advice
There’s no shortage of people out there willing to offer you advice on what you should and shouldn’t do to minimise your tax. Our advice is simple: be careful who you listen to. As we explored last year (‘Perfect Match: Finding the right accountancy partner for your business’, July 2017) the stakes are often very high and there are many things to consider.
It’s critical to get it right because, ultimately, it’s you who will enjoy the benefits of an effective taxation strategy…or…face the music should things go wrong.
Interested in gaining a better understanding of your personal tax exposure, including tax strategies for 2017/18 and beyond? Please contact Steve Fitzsimons here.