Offshore companies

[natmarie73]

Thanks again for all this fantastic information. I have really learnt heaps from everyone who has responded.

It looks like an offshore company will be a waste of time and I will need to look at structuring a normal company with perhaps a trust structure for tax minimisation (not avoidance!) I did hope I could get away with not paying any tax on my anticipated future forex trading income, but if its not to be its not to be .

That leaves me with the question of what sort of tax rate am I likely to expect through a company. I have heard that if the majority of my income from a company is from one area, it is still taxed at the individual rate. Is this true? Looks like a trip to the bookstore is in order!

Cheers
Nat

 

[GreatPig]

I have heard that if the majority of my income from a company is from one area, it is still taxed at the individual rate. Is this true?

I'm not sure what it's like now, but I remember quite a while ago being told that if the work was all your own exertion and the majority of income came from just one customer, then you might have a problem. I think what the ATO was concerned about was employees deciding to become contractors but otherwise doing the same as before for just the same company. These people were really ordinary employees but using a company structure to reduce their tax, perhaps including income splitting with their partners and even claiming travel expenses from their home (their supposed place of business) to where they worked. Unless you could show you were definitely running a business and had at least a few different clients or customers, then they'd say you were really just an employee trying to avoid tax.

Even if this is still the case, I don't know that it would be a problem for a forex trading business. In that case it wouldn't be like you were just working for someone else who could potentially be called your employer.

Anyway, get professional advice from an accountant before you start. My memory of this is pretty vague now.

GP

 

[natmarie73]

Thanks Great Pig,

I do remember that rule when the GST was introduced and it makes sense now that you've explained it in that way. I was thinking that a company's income had to come from many different activities ie share trading, property, services or whatever and not one payer as such.

I would be happy to pay company tax on share or forex earnings, but not at the top individual rate! I will definately make an appointment with my accountant to get more information.

Thanks again
Nat

 

[Patosan]

I hpe your accountant is worldly and vastly experienced, most accountants have trouble coming to grips with Oz trusts. Things of the offshore nature will draw a blank or inexperienced opinion. Think I'd prefer the blank.

Good luck

 

[Glebe]

I'm not sure what it's like now, but I remember quite a while ago being told that if the work was all your own exertion and the majority of income came from just one customer, then you might have a problem. I think what the ATO was concerned about was employees deciding to become contractors but otherwise doing the same as before for just the same company. These people were really ordinary employees but using a company structure to reduce their tax, perhaps including income splitting with their partners and even claiming travel expenses from their home (their supposed place of business) to where they worked. Unless you could show you were definitely running a business and had at least a few different clients or customers, then they'd say you were really just an employee trying to avoid tax.

GP

My wife does this. Legally, we're treading a grey area, but we believe we have satisfied the Personal Services results tests (http://www.ato.gov.au/businesses/content.asp?doc=/content/15900.htm), and so does our business accountant (based in Western Australia) who prepared the contracts. Ethically, you could argue that we're going against the spirit of the ATO's direction, but that's their problem.