They say there’s only two things certain in life, death and taxes!
The market is efficient but it’s not always equitable and its outcomes not always socially desirable. Government intervention is the means by which the worst excesses and unintended effects of the free enterprise system are modified.
Tax collection not only funds government activity, it also provides a means of redistributing income, reallocating resources and helps to manage the business cycle via Fiscal Policy.
Taxes are an obligation on all income earners in a society such as ours. Most of us don’t object to paying tax to provide public goods and to support those who genuinely need a helping hand.
While avoidance and evasion of tax is illegal, tax planning or minimization is not!
The difference between tax planning and tax avoidance largely comes down to intent. Tax planning is organizing your clients’ tax affairs in the most tax effective way within the intent of the law. In contrast, tax avoidance schemes involve the deliberate exploitation of the tax system. https://www.ato.gov.au
Taxpayers are permitted to reduce their taxable income by claiming genuine work related expenses. Similarly, property investors, who are earning an income in the form of rent and potentially profit are allowed to claim all the expenses they incurred in earning that income.
All the costs of owning the property ( interest on loans, property management, rates, insurance, strata fees if applicable, repairs and maintenance etc + depreciation) can be claimed to reduce their taxable income.
Gross income – allowable deductions = Taxable Income
The wise investor gathers a professional team around them – specialist Property Advisor, Broker, Financial Planner, Conveyancer/Solicitor and importantly an expert Accountant to advise on structure and ownership splits to maximise your tax deductions and minimise your tax burden.
Gathering a talent bank around you allows you to leverage off of their expertise, experience and their networks in their specialist areas.