As a wealthier individual the subject of taxation is much more important. Wealthy individuals simply pay a disproportionately lot more in tax than the rest of the general population. And they also attract a lot more attention from the Australian Taxation Office.
Know your lodgement date
The general population who engage a tax agent generally have a tax lodgement date of 15 May following the end of the previous financial year. However if you are a wealthy individual your tax lodgement date can be earlier depending on your income.
If your last tax return resulted in a tax liability of more than $20,000 your tax lodgement date is now brought forward by 6 weeks to 31 March of the previous year. And if your previous years tax return was lodged late the lodgement date could be as early as 31 October.
Further, for business and superannuation structures controlled by wealthy individuals the tax lodgement date for these entities could be as early as 1 December.
In extreme instances the Australian Taxation Office can also request a person to lodge a tax return earlier. This is ordinarily when there is a history of non-lodgement, non-payment or if the tax return is needed as part of a larger review.
Know your amendment period
The Tax Office are restricted to auditing the last two years of tax returns for most of the general population. However for wealthier individuals with trust distributions from investment entities the amendment period can go back as four years from the date the Australian Tax Office issue the Notice of Assessment.
Know your penalties
As a wealthier taxpayers the Australian Taxation Office expects a higher level of tax compliance, tax governance and consideration of taxes in general. The ATO is undertaking a series of personal engaged discussions with wealthier Australians and the attitude and leniency of a careless wealthy Australian taxpayer is significantly lower than a taxpayer with little funds.
Keep your tax advice together
Given the importance of taxation for wealthy Australians it is important to make sure that the advice is documented and holistic. So getting a clear tax strategy from a tax lawyer or a registered tax agent is critical to getting clarity on your tax position.
Once you have your tax advice documented you should ensure that it is all in once place. And the tax advice should be reviewed in terms of what information should be made available to the Tax Office in the event of a tax review and what information should be held in reserve.
Typically legal tax advice is bound by legal privilege and does not need to be shown. Tax advice from a registered tax agent is also protected and does not need to be shown. In some instances other advisors provide tax advice or comment on tax advice – and this can be a particularly difficult situation as that advice is often available for ATO review.
Look at the big picture
Great tax outcomes are typically created when two simple concepts are put together in a different way for an unusual transaction. Engaging with a tax professional to understand your medium and long term plans is the primary way wealthy individuals create amazing tax outcomes as some smart tax strategies can take several years to build, create and execute. This compares to the general population whose primary tax advice is “find your receipts”.
Examples of long term tax advice can include moving to another country, selling a business, transitioning wealth, salary packaging or looking at retirement. The impact of Australian and international tax laws on superannuation funds, companies, philanthropy, trusts and partnerships are incredibly complex but can be leveraged to give wealthier Australians unique tax opportunities.
At Westcourt we are well placed to create great tax outcomes for wealthier Australians. As a firm focussed on delivering independent tax advice that is focussed only on private and family wealth we are uniquely placed in the Perth marketplace to give advice. And coupled with our international depth our advice can extend across the Australian tax landscape to your investments in other countries. Given us focus on taxes and prudent documented advice we are a natural choice for wealthy Australian seeking smart tax strategy – so why not give us a call?