I Don't Pay Tax

I don’t pay any income tax. I am married with 5 children all of school age and receive about $30,000 total per year as a family from Centrelink. I own one block outright and have nearly completed building my first home on this block. (Currently we live in rented accommodation). I am paying cash for this construction. In addition, I have borrowed $475,000 on the security of this first home to purchase a block and build another home nearby. Construction on this second home is due to start anytime. I have a low doc interest only loan and have set aside sufficient funds to pay the interest during the construction period.

My plan was then to sell the first home when the second was completed and move in. I had a thought to build one new home every 12 months and keep moving. I filed a tax return each year for the past 3 years but did not have to pay any tax (all my funds are in unrestricted non-preserved superannuation) I am not sure what the best planning is. All the books I read either about positive or negative gearing base tax allowances as part of their calculations. I am 59 years old. My wife does not work. I have no income other than Centrelink. I work as a volunteer.

Any suggestions?

Thanks
Malcolm
Perth
 
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Tasii,

Regardless of the other details provided, I am curious to know HOW (not to mention over what length of time) you intend to repay a loan of $475,000 when the interest repayment alone (at an assumed rate of 7%) is $33,240 annually when your income is a mere $30,000??? :confused:

Cheers,

Jo
 
What are you trying to achieve?
To build a new home every 12 months and keep moving to avoid CGT?

I'm not an accountant but i believe you are limited to doing a certain amount of these in a certain time frame before you're classified as a developer.

Although volunteering is a noble thing, maybe consider getting a paying job or getting the wife to work. You could also have a few more kids to increase your welfare payments :)
 
I am 59 years old. My wife does not work. I have no income other than Centrelink. I work as a volunteer.
Malcolm,
imho.
the way i would look at this is when you sell the first property do centrelink
take the capital gains$ you make and treat them as income then you may
missout on your centrelink payments,im not sure the way it works
with centrelink but it will pay to ask the question beforehand,otherwise you
will be a taxpayer again, maybe your wife can work.
good luck.
willair..
 
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Tasii, Go and get a job. The welfare system is there to help those in GENUINE need, not to create property millionaires. You obviously know how to work the system to your advantage.
I'm sorry, but as a taxpayer I get angry about this sort of thing.
 
units4me said:
Tasii, Go and get a job. The welfare system is there to help those in GENUINE need, not to create property millionaires. You obviously know how to work the system to your advantage.
I'm sorry, but as a taxpayer I get angry about this sort of thing.

Ditto

See Change
 
Monopoly said:
Tasii,

Regardless of the other details provided, I am curious to know HOW (not to mention over what length of time) you intend to repay a loan of $475,000 when the interest repayment alone (at an assumed rate of 7%) is $33,240 annually when your income is a mere $30,000??? :confused:

Cheers,

Jo
Tasii,

As Jo mentioned above, how are you going to fund this on Centrelink payments alone? Not only do you have this huge shortfall for the new home, you also are still paying out to complete the first home. In all due respect, I think you need to get yourself a job.
 
This discussion raises some interesting distinctions between how we view tax (and tax deductions) and social security.

If someone structures their affairs to (legally) get the most social security payments out of the government then this is condemned.

Whether or not they do voluntary work (as yet of unknown quantity and worth to society) seems irrelevant.

On the other hand, if someone arranges their investment structure to (legally) minimise or defer tax then they receive high praise.

I think this comes about because of the idea that wealth, like power, should originate with the people and not the state. Any taking of both money and power by the state from the people is viewed as a bad thing unless there is a compelling reason for it. And social security to already quite well off people wouldn't be viewed as compelling and worthy of public subsidy.

Because social security is seen as a safety net for the inpecunious, those with investments are treated parsimoniously by social security but generously by the tax system. Hence the suggestion from others of 'get a (paid) job' is not without merit if you want to leave the 'social security' stream and enter the 'taxpayer' stream, where the rules are different (and better).

Rgds, Peter
 
You're all missing what must be the biggest question...

Which bank?????

Um, Which bank loaned you $435k based on an income of $30k with 5 'serviceability hits'?

asy :D
 
asy said:
You're all missing what must be the biggest question...

Which bank?????

Um, Which bank loaned you $435k based on an income of $30k with 5 'serviceability hits'?

asy :D
Absolutely Asy!!! ;)

That question was at the forefront of my mind, but not knowing the FULL (or "real"???) extent of Tasii's set of circumstances, I didn't want to ASSUME that just because he is (a) 59 years old, (b) unemployed, (c) has five dependant school aged children, and a spouse, and most importantly (d) no income generating asset base to speak of, that any bank in their right mind would begrudge throwing (a near retirement aged man) almost half a million dollars as a measure of goodwill!!! :p I mean think about it....if centrelink benefits can get you this far, then the aged pension should be able to cover the interest repayments on 475K without any difficulties, should it not??? :confused:

:p :p :p
 
Hi all to add some thoughts in to some degree sorry if this sounds garbled but I'm in a bit of a rush - if he has done it on a low doc loan then basically you fill in a box on the form to say what your income is and sign a declaration and then the bank works its servicing on this number and no further substantiation is required. Also from the sounds of it Tasii has enough funds in his super and properties to clear the debts if they prove too onerous. W/ Centrelink a bank will take the income earned (i.e. pensions etc) to repay the debts, theoretically if the Loan to value ratio is less than 30% at retirement then they'll still allow it thru (or the ones ive worked with do). However what will probably happen to Tasii long term is that the government will know which properties are being mortgaged and bought and sold through the states and so will the ATO, who Ive seen issue warrants for the loan files to see what is happening (which is normally handled by bank security who also become involved). If this is the case they'll generally get involved as well and consider freezing advancing further funds towards the construction until is sorted out. Basically they'll come up with the same questions that you have - how can you afford these payments etc as from your returns you have only earned $30k pa from centrelink and either he's committed fraud to the bank by overstating the income, or misled the ATO and then he'll be on current affair for one of those situations where the C'Link wants their money bank since he misled them for all of these years and the poor people cry why me
 
Lukantel, you just reminded me. If this guy has the accessable funds available to do this, then Centrelink would not be paying him anything. I suspect that he has not declared a certain amount of funds, thus enabling an income from Centrelink.

Correct me if I am wrong, but last time I had to use the services of Centrelink it was made quite clear that if I had savings then I would have to deplete that before I could claim.

Anyway, I would be very cautious about such a strategy ubless I could very clearly service it. I doubt one could do it on 30K and 6 dependents, in fact I would prefer that tasii made efforts to secure his current holdings and consider his family.
 
Tasi, you got me thinking....... a few points....

1) WINDUP ALERT ?????

2) If you are for real, it is people like you that ensure the rest of us who work for a living, end up paying astronomical taxes..... From the limited amount of information you have provided, I would agree with others here, and be quite angry at what you are doing.....

Centrelink is there to assist people IN NEED.... you are clearly NOT in NEED......
 
units4me said:
Tasii, Go and get a job. The welfare system is there to help those in GENUINE need, not to create property millionaires. You obviously know how to work the system to your advantage.
I'm sorry, but as a taxpayer I get angry about this sort of thing.


I totally agree, and the question i would like to ask is are you unable to work or do you just not want to work?. :confused:

Foston
 
COME IN SPINNER!!!! This guy is just doing some fishing, trying to catch a few of us and get us upset.

Why else would he put up a heading "I don't pay tax", he might as well said " ha ha, i don't pay tax"

Its his first post and hopfully his last :D

GG
 
Gordon Gekko said:
COME IN SPINNER!!!! This guy is just doing some fishing, trying to catch a few of us and get us upset.

Why else would he put up a heading "I don't pay tax", he might as well said " ha ha, i don't pay tax"

Its his first post and hopfully his last :D

I think you might be right there, GG. I wondered about the thread title also. :)

But why would you leave your phone number and name at the end of the post .. unless it's the name and number of someone you despise...? :cool:

Plus, tasii hasn't visited the forum and logged in, since two minutes after this thread was made.
 
Has anyone called the number?.......

BTW, why would say that he doesn volunteer work if he is just here to stir people up?. Doesn't make much sense. Perhaps he feels society is better off from him working full time in a volunteer organisation for no pay and living on centrelink benefits than him going out, getting a job and paying taxes like everyone else does.
 
Gordon Gekko said:
COME IN SPINNER!!!! This guy is just doing some fishing, trying to catch a few of us and get us upset.
Upset??? :D Oh please whatever you do don't mistake my sense of curiousity for aggrevation in anyway. ;) I am not even remotely upset, in fact I haven't read a funnier, more BS laiden post in ages!!! If this 59 year old, soley welfare reliant, heavily dependant family man can get the bank (any bank) to cough up 475K on just 30K earnings I will happily go down to the bank in question and (a) bare my butt, and then poise my lips in readiness to (b) kiss the banker's butt as part of my personal loan application!!! :p

Puhleez !!! :rolleyes:
 
WJ - dont know much about c'link and declarations - in general I agree with the majority of the sentiment to hand - GG you are dead right as well to a point re your 1st reply...- (and believe me I am not trying to take sides...... but just provide some insights on the what if's of the finance side) but what you also need to bear in mind is that Tasii could be just working within the system, and we dont know his circumstances fully. At the end of the day if he has enough assets through property and shares/super etc to clear the debt if things go bad then if one bank didnt approve it another would. The thing is that if the guy has a bunch of $ in super and property here and there I dont think he's going to jeopardise things by building spec properties. From memory, if his money is tied up in non preserved super isnt the max tax you get charged on a super is 15% and he's doing community service work for c'link so he's probably working inside of the system (that we as voters allow to continue). If you do the commmunity work then you keep your c'link and you also keep your govt benefits as well (i.e. discount, pensioner, and medical cards for prescriptions) so its generally worth it for pensioners on C'link to do it or risk losing these things. I mean I have clients who have over $1m in super and do the same thing - So at the end of the day the question may be is if you could get away with paying 15% tax vs 30-50% tax after working for the last 30 years (whatever your tax rate etc is) who wouldnt (pre-CGT of course).
 
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