Legally slash your tax by 90% in 15 minutes – 1 of 2

I should tell everyone that I’m not
an accountant, I was a licensed financial planner for about 25 years in
Australia and I know lots and lots of stuff and I can speak from my personal
experience but nothing I say is official recommendation… it’s like getting getting
diet advice from you from your friends: you gotta check with your doctor as well
and make sure it’s applicable to you… so I can have a chat to you I can
answer questions and I can put you in touch with people who are experts in the
field. It’s interesting a lot of people want to go and talk to their
account and about their tax and their taxation structures without actually
realizing who the accountants are, who the accountants work for, and how that
system works. So a lot of people are very surprised when they find out that the
ATO is not a government department; it’s totally not government, it’s a privately
owned company. In Australia we have government departments, so we have the
Defense Department we have the Aboriginal and Torris Strait Islander Affairs Department…
We have the immigration department… We have all these all these different
departments, but we don’t have a “tax department”. We have the “Australian
Taxation Office” which is a private corporation. It’s basically a licensed
debt collector who works for the government but is not part of the
government, the same as the Australian Electoral Commission is not part of the
government either. It’s not a government department. They’re an independent
contractor who basically tries to convince you to enroll to vote so that
you’ll spend the next 40-50 years of your life voting, but if you never signed
a contract with the AEC saying that you will vote then you don’t have to vote…
This is why at the moment you’re seeing ads on Facebook, you’re seeing ads on TV
they say the same thing: “Please come enroll to vote”, because enrolling to vote
is not compulsory! But once you have actually enrolled to vote then you’ve
signed a contract saying you will vote… if you don’t vote then they can actually
penalize you: you’re breaking the contract and it’s a similar thing with the ATO
if you’ve signed the contract with the ATO saying “I’ll give you 30% of my wages
for the rest of my life”, then if you don’t do that, then you can get penalized; (Can we get out of that contract?) yes and no — technically once you’ve signed the contract you’re in the contract, so
you as an individual “John Smith” signed the contract but then you can actually
start another structure… When I first started out in financial planning I was
just a Sole Trader; I didn’t know any better and it was just me myself
registered… Once I started to make decent money, once I started to pay a fair amount of tax, the accountant said to me, “Hey, you can form a company and instead of paying
48 percent tax you’ll pay 30 percent tax”, and I went “YAY!” so I formed a
company, and then the company signed a contract with the ATO saying they’ll pay
30 percent tax, but I was better off so I was saying thank you to the accountant
even though the accountant was still helping them to take 1/3 of my wage…
a couple of years later I started a couple of other retail businesses and
things and the accountant said to me, “You’re paying too much tax you should open
a Family Trust” and there’s family trusts and hybrid trusts and discretionary trusts
and all sorts of different trust that you can have; probably some people on the
call have got them… Through the Trust I could actually pay 15% tax instead of 30% tax
and I thought this was fantastic as well… but still the accountant is actually
working for the ATO… it’s the ATO who licenses him to give advice. If there’s a
structure out there that enables you to pay 1% tax or 2% tax or even 0% tax,
he’s not going to tell you about it, because the accountant doesn’t want you
to stop coming in… that’s basically his business… He’s not going to give you
advice that runs contrary to what the ATO says he can tell you otherwise he’s
going to lose his license. There are structures available and there’s plenty
of people using them, but you won’t get this advice from an ordinary accountant
who’s actually licensed by the ATO. You have to find yourself a pure accountant.
Income Tax came into Australia in 1915… That’s only 100 years ago…
Income tax came into the USA in 1913 … again around 100 years ago, to fund WW1 to fund the war effort. It was supposed to
be repealed in 1918 when the war ended, but by that stage, they had so many
people looking after the tax, so many accountants looking after it, so many
politicians administrating it, they didn’t want to give up their jobs, they
didn’t want to lose the money… So income tax just stayed in. Before we had income
tax there was a 150 years of US history, 150 years of
Australian history, where we didn’t have any income tax, yet there were still roads,
there were still schools, there were still hospitals, there was still an army
and a navy and this sort of stuff… That money actually came out of general
revenue. There were sales taxes on things: every time you bought a packet of
chips or every time you bought a car, there was a sales tax, but you didn’t
need to report on what your income was, you didn’t need to submit tax returns…
That’s something that’s only relatively recent, and again pure
accountants: there was accountants around for hundreds of years before income tax came out But now you’re dealing with tax agents, so
it’s very very rare to find the pure accountant… I’ve been lucky enough to
find a couple over the last 20 years and really lift the lid on this system and
say “Hey what’s going on?” Because once you find out that the ATO is not a
government department, you start to ask questions.
Once you’ve stepped outside of the matrix, you can go back into the matrix
but it looks completely different to how you thought things were.
(Wow this just takes it to a
whole other level) (So those of us who signed a contract, clearly
all of us, what do you do in the case?) (What do I do? Like rip up my contract
that I signed and hide? What do you do?) (I don’t like this: it’s awful!)
When you’ve got your
own business it’s a lot simpler… …for myself, I was running a few
businesses I could start companies and I could start trusts and things like that…
there’s special structures that you can start that aren’t actually under the
jurisdiction of the Australian Taxation Office… simply because if you don’t give
them the authority they don’t have it! You’ve got the authority yourself, they
don’t have the authority over you… you can have these structures that have
perhaps an ACN but don’t have a tax file number… The tax commissioner can
knock on your door, the Prime Minister of Australia can knock on your
door and say, “Show us your bank records” and you can just say, “Sorry! You don’t
have any jurisdiction over me. You don’t have any authority over me.”
(I love this!) It’s completely legal; (Is that only if you don’t have a
tax file number?) On the entity! On the structure! As an employee it’s
difficult because you’re contracted to… like let’s say you’re working for
Hewlett-Packard; HP has got you on the books as an employee. They pay your taxes
for you. But as a business owner, you’ve got control over whether you run
your business through a company, through a trust, or through some other sort
of structure, so it’s very very easy for you in your situation say, “Ok business”
and the business can actually run through this entity… As for what I do as
an employee, it’s not impossible to escape the tax system, it’s just a little
bit harder… a little bit more complicated, because it relies on the person who’s
actually writing checks out to you. (Cool! So Wow! Really we need to look at
different ways of, not avoiding paying taxes but sort of being creative?) Absolutely! Absolutely! I mean, there’s also asset protection. I think I talked last week about someone who had a couple of different businesses
and was running them through the same structure. Every now and then in business, it depends, if you’re in nursing you might accidentally stab someone with a needle,
or if you’re in construction, one of your houses might fall down, and someone’s
going to sue you! If they sue you, they can take whatever is in your name.
They can take your house, they can take your car, they can take your business. But
if the business or the house or the car happens to be in the name of another
structure, Kameran family trust or something like
that, it’s not actually yours. Technically it’s
not yours. It’s owned by your Family Trust, which is a separate legal entity…
and because the family trust is a piece of paper, the piece of paper doesn’t make
a building fall down… The piece of paper doesn’t stab someone with a needle, so
the piece of paper is very very very unlikely to get sued… and that’s a way of
protecting your assets, and keeping what you’ve worked so hard for, whether it’s
your income or whether it’s your assets… protecting those to make sure no-one else can get them. (Why doesn’t everyone know about you?) Why doesn’t everybody know that the ATO is not a government department? It’s not in their best interest for you to know that. Why doesn’t
everyone know that income tax is optional? It’s not in the government’s
best interest to have you know that! But you’ve got companies out there, I’m sure
you’ve seen some of this stuff getting around the press recently: Google
made two billion dollars and they paid 2.5% tax. Apple made
over eight billion dollars and they pay 1% tax. Facebook who’s paid 1%, and GE who
paid 1%, Amazon, Disney, Microsoft, Australian Energy, Dell, Dropbox, PayPal…
all of these guys are paying less than 2% tax! They’re doing it legally and when
people find out about they go “Oh that’s unfair!” and “Google should be paying more
tax!” and blah-blah-blah-blah-blah; but if they’re doing it legally, what are you
going to do? If you’re on a scooter doing 70 miles flat-out on the highway and
someone passes you’re doing 120; don’t complain about them, just say, “How can I
get a car that does 120?” You’re not Amish! If you grew up on an Amish farm, you wouldn’t
know any better, you wouldn’t even know there’s cars… but once you actually see
what’s available, it’s available to you as well…
and if everybody was paying 1% tax you know what? That’s actually a fair system!
Whether Google pays 1% or you pay 1%, if the government doesn’t like it,
they’re going to have to change it for everybody! It’s unfair that Google and
Apple and Microsoft and these guys can get away with it, and you can’t; simply
because you don’t know how… no one’s told you… (But you know how?)
Absolutely! It took me a long time to find out. When you first start out financial
planning you’re investing Mrs Fuddy-Duddy’s $30,000 and you’re messing with
some guys super… it takes you a long time before you actually get to meet
millionaires and billionaires… once you get to meet millionaires and
billionaires, you find out they do business very very differently, because
they know the law. They actually spend time reading the Australian Constitution
and reading the Bills of Exchange act and the Currencies Act and the Taxation Act…
and finding out all of these things are optional… but we’re brought up to say, “You
must vote: it’s the law” or “You must pay tax: it’s the law”, and people just believe
that… but no one ever actually checks the documentation! The Constitution’s not a
long document! You can read through it in less than an hour… and once you read
through it, you find out, you know what? I don’t have to do this! So why am I doing
it? (Yes! I like this! Mind blown!) (I’m just thinking about my dad. He’s got a truck company, and the amount of tax he pays is phenomenal!)
It’s very very easy when you’ve got your It’s very very easy when you’ve got your own business, because it’s just basically grabbing a bit of paper and creating a new entity… When I’m saying Google and
Apple and these guys pay one or two percent tax that’s absolutely correct;
but not saying they’re rat-bags, they just do it legally, then they choose to
sponsor a different cause… They choose to give money away to
charity… When you’ve got a gun to your head saying “Give me 30% of your wages”
you kind of do it begrudgingly… but once the gun is taken away, and you say,
“Oh, now I’ve got 100% of my money, I might choose to get passionate
about… I might want to build a library… I might want to donate a wing to the
hospital… I might want to do this, I might want to do that… Before 1915 when we had
the museums and the hospitals and the roads and schools they were paid for by
the community… Rich people in the community would actually become generous
because they weren’t paying tax, they wanted to give back… and this is what I
like to do…. (So basically we all need to get an appointment with you, so you can sort out our lives?) Basically yeah. Yes just because
everybody’s different… We were talking before about the pharmacist:
everybody’s got a different medical condition, and there’s not just
pharmaceutical drugs that can fix that, there’s a range of natural alternatives
as well… For most business owners it’s a very very simple process. The reason your
accountant isn’t telling you about it is because there’s no money in it for him…
if you don’t keep coming back and if you don’t keep submitting your shoebox full
of receipts and paying him to lodge your taxes, then he’s gonna lose money….
Accountants used to do this in the olden days, before income tax came in… They
just have to work a little bit harder, and be a lot nicer, because it’s optional…
(Did anyone who’s on this call know about this?) (Can you raise your hand?)
(Wow! One!) For the ones that we do there’s a startup cost obviously because you’ve got to employ
the services of the accountant and solicitor to do it, but once it’s set up, it just runs… it just runs and you
don’t have to pay another cent for as long as you live… (Jeremy question here?)
If you want to spend say $10,000 on structures to save $50,000 on tax, then
that’s the decision that you make and there’s probably worthwhile… but if you
want to spend $10,000 on structures and you’re only saving $12,000 on tax it
might not be worth your while…. it’s just a lot of mucking around but for not much
benefit.. it’s individual case-by-case… There’s people on this call who are making
truckloads of money, there’s some people on this call that make a little bit
of money but will be making truckloads later on, and it just comes down to what’s suitable for the individual at the time… (Yeah! Cool! Thanks!)
(Well you’ve got our business that’s for sure!) It’s definitely possible, it’s just whether it’s easy for
you or whether it’s too complicated and that’s call that you make… I’ll ask you a
whole bunch of questions about diagnosing your situation and then say, “OK, for you it’s gonna cost this and it’s gonna involve this and it’s gonna
involve this…” You don’t need to fly to the Cayman Islands… I’ll just put that
out there now… You don’t need to go to Hong Kong, you don’t need to fly overseas
to set up different bank accounts and that sort of stuff… it’s very very simple
it’s done from Australia. We use Australian banks and Australian bank accounts…
it’s very very simple but it’s just whether it’s worthwhile for you and
that’s the choice that you make by yourself. (Thank you! Interesting! So is
there many people doing this, with businesses?) There is… I find it hard to get stats in
Australia because Australia has different privacy legislation but in the
U.S. it’s a lot easier to find out which is why those companies that I said
before: Google and Facebook and PayPal and eBay; they’re mostly American
companies except for Energy Australia… In America there’s over 491 000 people earning up to $10 Million a year,
so we’re not talking they’re actual millionaires in assets; they’re making
$10 Million a year… Almost half a million Americans, making ten million
dollars a year, who pay zero tax! That’s the USA statistics, the Bureau of
Statistics stuff… in Australia, it’s hard to find out…. (What happens to all the welfare people?) That’s a really great question! I’ll flip
it back… You probably know that the politicians are fat… you probably know
that the politicians charter private helicopters to go to their sister’s
wedding and this sort of stuff… right now we’ve got a truckload of politicians who
are bringing in about half a million dollars a year plus their $800,000
expense account, which, they always spend that, they always blow that… politics is really
ineffective: money they’re taking in and saying, “We’re supporting the poor” and
“We’re giving to the pensioners”… around about 70% of that money isn’t getting
to the end recipient… in fact only about 10% of the tax money is actually
going into social causes, and that includes the pensions, the welfare, the
building of the hospitals, the roads and that sort of stuff… only around about 10% of the money that’s going to the government, actually gets into the hands
of the end recipient… which is interesting: if anyone’s got the
religious bent, back in the day, before there was income tax 100 years ago they
used to say, “Give away 10% to the poor” and the communities and the towns…
if there was a poor homeless person in your town, people would give them money…
the community would support them and if everybody wanted a school, they would
all chip in together, and they would build a school… and that’s how people did
things before the government actually took it out of our hands and said,
“We’re gonna take the money; we’re gonna look after it… … we’re gonna do the social
justice thing”… but 70 – 90% of the money gets wasted on the government who are
actually trying to administer this thing… if you want to support the poor, then
absolutely support the poor, and that’s what a lot of Google and Apple and
Microsoft vaccinating children… and they want to do good things, but they do it
without the government, because the government is very very wasteful…
(Wow) (You’ll be getting a few phonecalls!) I have an electronic calendar so
people can go to They can just go, “Okay I want to
talk to you two o’clock Wednesday or 4pm Friday or whatever, that’s entirely up to
you… (Do you have a phone number?) The easiest way is go to and you actually find where I’m available and click on that
and it will actually give you the skype details and the mobile numbers and that’ll make sure I actually take your call, because obviously if you try to call
me now, I’m on this call, I’m not going to answer (Thanks!)
welcome… (Very good!)


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