What does it mean to protect your assets and optimise your tax obligations?
It ought to be clear that optimising your tax obligations does not equate to tax evasions.
Let’s consider the following example:
Jane works in a bank as a financial analyst and earns $200,000 a year plus entitlements.
She has two children under the age of 18.
Jane’s husband, John, works in construction as a builder and his income depends on the market.
If both Jane and John plan on buying a matrimonial home and investment properties, here are some things to consider.
John’s business
It may be beneficial for John to consider incorporating his business into a Pty Ltd company. This may reduce the liability that John is exposed to in his work. This may improve the taxes John pays as well.
Although the question of liability is a complex one, the general principle is that if a company is sued, the director/shareholder is not necessarily personally liable. Given that John conducts his business in accordance with the rules and regulations pertaining to director’s duties and those duties are not breached, John’s liability may be indeed limited.
Nonetheless, the nature of John’s business is unstable.
Jane’s career
Using the same scenario, Jane is considered to be in a low risk/low liability job which is ideal for optimising the matter of asset protection.
For Jane, she is unlikely to be subject to legal proceedings due to the nature of her work. It is good to consider that a person who is less likely to be subject to legal proceedings, to hold matrimonial assets.
The Objective of Assets Protection
The objective of assets protection is not to defeat the interest of creditors, but rather, it is setting aside assets
If you have any further questions, please do not hesitate to contact our registered Tax Accountant Vishal Patel for more information.
