By Ian Rodrigues – Director Bishop Collins
Taxation reform – the real and significant kind – has eluded us for some time now. There are of course many strongly held views about taxation at every end of the spectrum. Every tax, or proposal to make any change is hard to get consensus. Even when to objective and unbiased observers, a fair and common sense change is mooted, there is a vested interest or a political opponent seeking to argue the point with the aim of keeping the status quo. So where can you actually find a thorough, fair and unbiased opinion on tax reform? Does one even exist? We have had our share of government requested reviews, this often means their independence can become “politically tarnished” whether they have good ideas or not. Little of the recommendations from these reviews have actually been followed through and some of the attempts at them have been “politically bruising”. It seems to be the way the system works for now and there does not appear to be any real change on the horizon.
As an adviser, we can only guide our clients and suggest that:- the current rules are what they are; they present opportunities to ensure you pay the correct amount of tax through legitimate tax planning, such as super, negative gearing and timing your capital gains. We don’t make the rules. For the tax policy purists, a clean sheet design would never come up with the system we have! We have a tax system where the tax outcome on the same property transaction can result in tax payable of 0% 10% 15% and in between up to basically 50%. Remember, on the same economic transaction you can get a tax outcome of between 0% and 50%.
So what should you do? Simply put, get ADVICE and PLAN ahead. Your accountant is well placed to help. Without this you can easily end up paying more than your fair share of tax.