Accused of avoiding to pay land tax

[THEGREAT888]

A story from a acquintance.

Abbott and wife have a few joint properties in nsw.

As they discovered that they are liable to pay a huge amount of land tax, they decided to contact land tax office and asked for advice . They made up a few different scenarios so they can make informed decision on which property goes to whom. They asked the land tax office what the amount they are liable for if they choose to have the property title transfered to individual/non-joint ownership as they now know it will reduce a large sums of their land tax bill.

The couple are aware that when the transfer of title occurs one of them will have to pay half of the full stamp duty once again.

The couple was very upset as the officer from land tax office accused them of avoiding paying tax.


They felt it was nothing wrong with their intention as they just want to reduce their expenses/land tax bill.


What do you guys think?

In this situation, would you say this couple was doing the right thing or was avoiding to pay tax.

Please share your opinions

Regards
t

 

[nhg]

If it is legal, do it.

I travel abroad often enough to fully understand how much of a difference our taxes make to the quality of our lifestyle in Australia. I don't have ANY problems paying tax. If I can reduce it legally though why would I NOT try to reduce it when I can.

If anything, I reduce it in order to leverage my investments and create more profit which in turn means I pay MORE tax in the long run.

 

[Rolf Latham]

If it is legal, do it.

I travel abroad often enough to fully understand how much of a difference our taxes make to the quality of our lifestyle in Australia. I don't have ANY problems paying tax. If I can reduce it legally though why would I NOT try to reduce it when I can.

If anything, I reduce it in order to leverage my investments and create more profit which in turn means I pay MORE tax in the long run.

^^ Like

ta
rolf

 

[Rolf Latham]

The couple was very upset as the officer from land tax office accused them of avoiding paying tax.

t

typical sour grapes I expect

Legal minimisation

ta
rolf

 

[Aaron Sice]

it is not illegal to seek ways to minimise your tax payable. hell, the ATO themselves run seminars on the matter.

there is a very solid, black line between the definitions of tax minimisation and tax avoidance.

 

[Terry_w]

A story from a acquintance.

Abbott and wife have a few joint properties in nsw.

As they discovered that they are liable to pay a huge amount of land tax, they decided to contact land tax office and asked for advice . They made up a few different scenarios so they can make informed decision on which property goes to whom. They asked the land tax office what the amount they are liable for if they choose to have the property title transfered to individual/non-joint ownership as they now know it will reduce a large sums of their land tax bill.

The couple are aware that when the transfer of title occurs one of them will have to pay half of the full stamp duty once again.

The couple was very upset as the officer from land tax office accused them of avoiding paying tax.

t

Do you mean now or in the future. Which state?

In nsw I dont think there are any anti avoidance provisions in the land tax management act.

 

[Rob G.]

it is not illegal to seek ways to minimise your tax payable. hell, the ATO themselves run seminars on the matter.

there is a very solid, black line between the definitions of tax minimisation and tax avoidance.

There is no such bright line between tax minimisation and tax avoidance.

Tax avoidance is legal, but contrary to the intention or spirit of the law.

State revenue laws usually have the equivalent of the income tax law general anti-avoidance provisions, which is probably what the SRO adviser was warning the friend about.

Therefore there is no point in asking whether a transaction is legal or not, the overall result may still be struck down.

Cheers,

Rob

 

[THEGREAT888]

There is no such bright line between tax minimisation and tax avoidance.

Tax avoidance is legal, but contrary to the intention or spirit of the law.

State revenue laws usually have the equivalent of the income tax law general anti-avoidance provisions, which is probably what the SRO adviser was warning the friend about.

Therefore there is no point in asking whether a transaction is legal or not, the overall result may still be struck down.

Cheers,

Rob

Hi rob
I did not get what you meant by your last sentence. Can u elaborate? Thanks

 

[Tigerboy]

I remember studying a high court case from the 1950's which said that it was every person's duty to their family, to reduce the amount of tax they pay. Needless to say a great decision for tax planning and when you think about it correct.

So if you can avoid (not evade) paying tax, you are only fulfilling your family obligations.

Huss.

 

[Aaron Sice]

I remember studying a high court case from the 1950's which said that it was every person's duty to their family, to reduce the amount of tax they pay. Needless to say a great decision for tax planning and when you think about it correct.

So if you can avoid (not evade) paying tax, you are only fulfilling your family obligations.

Huss.

please provide an auslii link?

 

[Tigerboy]

It may be difficult Aaron because I can't remember the case name. But i'll start looking and see if I can find it.


Huss.

 

[Aaron Sice]

There is no such bright line between tax minimisation and tax avoidance.

Tax avoidance is legal, but contrary to the intention or spirit of the law.

that was my point!

you can minimise yourself down to nothing, even a refund.

if you have legitimate deductions that reduce or allow to avoid paying tax - then the intent is clear.

but simply "not paying tax" is not acceptable - at least, not without a high court challenge.

even then, intent will come into it.

this is not the US with no direct mandate allowing the IRS to collect.

 

[Scott No Mates]

I am pretty sure that it was the late Kerry Packer who said that not a court case.

The thing to be wary of with transferring properties between partners etc is not only the stamp duty payable but also that you will be triggering a capital gains tax event by doing so. If that is the case, are you really saving anything? Seek financial/legal advice before doing so - if you are going to be transferring & paying stamp duty, then set up a trust if it suits the purpose so you can distribute costs/profits equitably.

 

[Rob G.]

I remember studying a high court case from the 1950's which said that it was every person's duty to their family, to reduce the amount of tax they pay. Needless to say a great decision for tax planning and when you think about it correct.

So if you can avoid (not evade) paying tax, you are only fulfilling your family obligations.

Huss.

It was a UK House of Lords case concerning interpretation of a provision with no equivalent in Australia.

Since then, the UK has literally hundreds of anti-avoidance provisions, judicial purposive interpretation and .... wait for it ... a new general anti-abuse provision.

Meanwhile, the Australian legal system has moved on from bottom of the harbour schemes as well.

But you go ahead and do your perceived duty, however it could prove to be expensive in the long run.

Cheers,

Rob

 

[THEGREAT888]

It was a UK House of Lords case concerning interpretation of a provision with no equivalent in Australia.

Since then, the UK has literally hundreds of anti-avoidance provisions, judicial purposive interpretation and .... wait for it ... a new general anti-abuse provision.

Meanwhile, the Australian legal system has moved on from bottom of the harbour schemes as well.

But you go ahead and do your perceived duty, however it could prove to be expensive in the long run.

Cheers,

Rob

Hi Rob

I understand you reminded people about due diligent.

But it would be appreciated if you could give a bit more information in response to my post and tigerboy post

 

[THEGREAT888]

I am pretty sure that it was the late Kerry Packer who said that not a court case.

The thing to be wary of with transferring properties between partners etc is not only the stamp duty payable but also that you will be triggering a capital gains tax event by doing so. If that is the case, are you really saving anything? Seek financial/legal advice before doing so - if you are going to be transferring & paying stamp duty, then set up a trust if it suits the purpose so you can distribute costs/profits equitably.

Hi Scott

Trust.
That is the food for thought.
Isn't it required a solicitor to set it up?
What is the average fee for the set up?
I guess you have to set up a trust before transfer can be made?

Your expert opinion would be appreciated
Cheers