Does anyone think they are paying too much tax? If so, are you looking for a solution to minimise your taxation using the same method that has been mastered by the Squires at the top end of town?
Well, you won’t be the first, but at least have a think about establishing a tax-exempt charity or possibly a religious institution as a solution. After all, there are only about 60,000 in Australia, largely unregulated, highly duplicated, with a value of about $60 billion p.a. and most seem to be dedicated to curing cancer or promoting causes in the name of religion.
So what is actually going on here with approximately 2,000 new tax-exempt charities each year? Is there an epidemic of philanthropy contaminating the wealthy or has this something to do with minimising tax?
Well, one thing is for sure: it’s certainly not about cash going to charity, its about Tax minimisation where you claim all your socialising costs (attendance at a major high-profile gala, sporting events, theatrical openings, fundraising balls and general entertainment), as deductible expenses, all written off to your charity.
Then, of course, you employ all your family and friends to work and administer the charity on generous remunerations, all at the expense of your charity. Ever wondered why like-minded charities with the same ‘cause and purpose’ never amalgamate to ‘gain synergies’ and reduce administrative costs? It would be counterproductive for these individuals even if the charities beneficiaries stood to gain! It doesn’t seem to matter to the Australian Tax Office that in many cases, very little money actually goes to charity.
So, the next time you are eating your tax-exempt Weetbix, have a think about why a company with revenue of $300 million p.a. is exempt from tax!
30th October 2016