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Published on 14 Jun, 2024
“The government doesn’t spend my money too wisely; therefore, I am not contributing a cent more than I absolutely have to, and anyone that doesn’t structure their affairs to minimise their tax should have their head read.” ~ Kerry Packer
 
We’re coming up to the end of the Financial Year here in Australia and you know what that means? 
 
It’s time to get your end of year finances sorted for tax time! 
 
Most Aussies HATE paying tax and will do everything and anything to avoid paying tax.
 
Is that you? 
 
But taxes aren’t something to hate.
 
They are something to be embraced.
 
Paying tax is the cost of being financially successful.
 
But like the late Billionaire Kerry Packer famously said – you want to ensure you do everything you can legally to ensure you keep as much of your hard-earned dollars as possible. 
 
Don’t be a Tight Arse like most Typical Aussies 
 
If you want to win the money championship then you must have the right players on your team. One of those important players is your accountant.
 
A good accountant is worth their weight in gold and can save you THOUSANDS of dollars and save you a lot of headaches. 
 
This is what Kerry Packer said to his young accountant Allan Mason back when they started working together in the 1980s, 
 
“Son, you need to be worth double what I pay you.
 
I love that line.
 
If you’re an employee and you have a simple financial situation – then paying an accountant may not be necessary for you.
 
But if you’re a business owner or have a complex financial setup – you will want to have a great accountant on your side – especially if you want to win the money game. 
 
Don’t fall into the trap like most typical tight-arse Aussies and try and do it all yourself.
 
Tax is an area that needs professional advice and the money you invest in an accountant (if they’re good) will be worth the time and dollars saved.

“A penny saved is a penny earned.” 

 
If you Cheat the System you will get Caught!
 
Have you ever asked your accountant to do some ‘creative accounting’ to help you get a better tax refund or reduce the amount of taxes you have to pay?  
 
If you have legitimate expenses to claim – claim them.
 
But if you’re pulling rabbits out of the hat to get yourself a few extra dollars or to avoid paying tax then this will come back to bite you. 
 
If you don’t have substantial evidence to prove your claims – the auditors will make you pay. 
 
The Australian Tax Office (ATO) is cracking down on this, and they have immense amounts of resources tackling this problem and they have complete visibility over your financial affairs. 
 
If you cheat the system – you will get caught. 
 
You’ve been warned. 
 
Do what you can to legally reduce your tax liability – but don’t be a complete and utter fool. 
 
Why Earning Income as an Employee SUCKS! 
 
One of the worst things about earning income as an employee is you are taxed at the highest rates (almost 50 cents to the dollar in the highest income bracket here in Aus) and your taxes are taken out BEFORE everything else.
 
The first line after your gross income on your payslip is always TAXES.
 
It’s no wonder high-income employees get p*ssed off that all their money is going to tax.
 
This is why ‘working harder’ isn’t the answer to become financially successful. 
 
You must work SMARTER and understand that not all income is created equal
 
Complaining and whining about your situation will get you nowhere.
 
Rather than playing the victim and hating the system – learn the system and play by their rules.
 
If you’re a high-income earner and you’re sick of paying substantial amounts in taxes – maybe it’s time you consider going into business for yourself. 
 
Why I Love Earning Income from Business
 
There’s no denying businesses have far more strategies available to legally reduce how much tax you pay. 
 
If you want to learn some of these strategies, I’d recommend reading ‘Tax Secrets of the Rich’ and having a conversation with your accountant about what you discover. 
 
One of the things I love most about earning income from a business is you pay taxes AFTER expenses.
 
For example, If I earned $100,000 over 12 months but had $30,000 in business expenses – I would only pay income taxes on $70,000 – not $100,000.
 
Whereas an employee who earns $100,000 pays tax on the full amount. 
 
This is a HUGE advantage. Especially when a large portion of your lifestyle expenses as an employee can become tax-deductible expenses as a business owner. 
 
But here’s the catch…
 
“With great power comes great responsibility.” 
 
Business owners have lots of advantages when it comes to tax – but you must be financially disciplined and put a portion of your revenue away for taxes. 
 
So many business owners have been caught with large tax bills at the end of the year and no money to pay the piper… 
 
Investing in Yourself is one of the Best Investments (and Tax Deductions) you can Make
 
Some of my biggest expenses are related to personal development and business mentorship and training.  
 
The great thing is these are all tax-deductible expenses for me.
 
When your passions and hobbies become tax-deductible expenses – you have unlocked one of the cheat codes to life. 
 
If you’re a business owner or run a side-hustle alongside your job like I used to – and you’ve been thinking about investing in yourself or your business – then invest before the 30th of June if you want to claim it as a tax deduction in the current Financial Year (FY24). 
 
(FYI – my programs & services are 100% tax-deductible for business owners – book a call with me if you’re ready to invest in yourself and your future + get a handy tax deduction).
 
Paying Tax IS NOT a Moral Obligation 
 
I’m going to close this week’s newsletter with a great quote from Sir Garfield Barwick (he was the chief justice to the High Court of Australia) in his speech from the 12th of April 2005.

“The liability to pay income tax is wholly derived from the law imposing and providing for the assessment of that tax. The obligation to pay it is a legal one. Some politicians try to treat it as a moral obligation. But it is not. The citizen is bound to pay no more tax than the statute requires him to pay according to the relevant state of his affairs.”

“Consistently with this view, it has long been a principle of the law of income taxation that the citizen may so arrange his affairs as to render him less liable to pay tax than would be the case if his affairs were cast in some different form. In the language of the layman, the citizen is entitled to minimise his liability to pay tax. This is sometimes expressed as a right to avoid tax, an expression which is in contradiction to the evasion of tax, a failure to pay tax which is properly due.”

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WHO IS MARSHY?

Financial Habits Mentor & Host of the Podcast 'Money Mastery with Marshy.

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