Tax Loopholes of the Rich
Tax Loopholes of the Rich
TAX LOOPHOLES OF THE RICH
by Tony Melvin & Ed Chan, authors of “How to Legally Reduce Your Tax … Without Losing Any Money!” available in all good bookstores.
For more information visit www.knowledgecentre.com.au
There are only two types of tax payers; those that play the game and those that don’t.
The former we call ‘Players’, and the latter is unaffectionately labelled ‘pawns’. For many years people have turned to the advice of their accountant looking for ways to join the ranks of a ‘Player. Those that could afford the right advice, or even better, the full gamut of services from a team of experts were welcomed onto the playing field with open arms and high fives all round. Yet those lacking the necessary financial resources were left to watch the game, relegated to being a spectator and the lurking thought – “but how do they do it?”
While it may appear that we are using a metaphor to explain the complexity of the Australia tax system – the truth is we are not being metaphoric. In Australia tax is a game.
It might seem like a paradox that tax is a game, but the truth is if you don’t treat it as such you’re liable to go mad. You see, any game consists of a reward for overcoming challenges. The rewards only exist because the challenges are there – no challenge – no game – no fun.
And so it is with tax, it can be fun! Fun you say?… yes and the first step is to not take it all too seriously. The proof is contained in this fact:
You are not the only one who doesn’t know all the tax laws – nobody does.
Here’s a story which highlights this fact. Recently a large public mining company in Australia has been hit with a demand to pay back taxes and penalties totalling billion. While the mining company is acting on “the best legal advice” and states “they don’t have any tax bill”, the Australian Tax office also claims to be acting on “the best legal advice” which says that “the mining giant does owe tax”. This fight will ultimately be decided in court but it’s just another example that even the “best” have no certainty on what the law actually is and how it is applied.
The complexity of our system is proof that tax has turned into a game. In the beginning, tax was something everybody tried to avoid. The government was trying through various laws to tax everybody fairly. Some people simply broke the law and they were punished accordingly. Others got smart and found loopholes. When the loopholes were over-exploited, the laws were changed to overcome the loopholes. The game for the taxpayer became “to find a loophole” and the game for the government was to “close the loophole” with more taxation laws. There you have it, it’s like a Tom and Jerry cartoon – we are playing cat and mouse. (We’ll let you decide which one is which!)
The loopholes started with favours or exemptions for business owners or investors. As large producers and contributors to the state or country’s economy, different laws provided concessions to these enterprises. Owners of such enterprises, of course, were the wealthy and although the wealthy were the original targets of tax, their cunningness allowed them to escape, relatively unaffected, leaving the rest of society to pick up the tab.
Today the game is no different. However, it seems that many have forgotten it is a game – only a few are playing. And as with all games, the more the merrier. We invite you to play. It’s legal, it’s fun, it’s rewarding, and it’s a damn sight better than kissing goodbye to nearly half your money! And as you might have heard before, it’s not about how much money you make over your lifetime, it’s about how much you keep, and how hard that money works for you.
Those that play the game of tax we call the “Players”: They are the ones who understand that it’s a game and learn how to use the tools of the game to their advantage. Those that choose not to play and continue to be affected by changes in the tax laws we call “Pawns”. The only difference between the Players and the Pawns is an understanding and application of the fundamentals.
One of the basic fundamentals is that there are only two ways to play the game of tax. You don’t play the game by dealing only in cash, and you certainly don’t do it by making less money. The way to play is:
You make tons of money and either:
1. Have a business or
2. Invest.
These are MUSTS – business owner or investor (or both). Only then does the game become playable, only then does it become fun.
If you remain an employee
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