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Who needs the Caymans? 10 ways to avoid paying tax

For much of my career in the 1980s, I specialised in global capital markets, arranging transactions worth billions of dollars on behalf of my employers, the Commonwealth Bank and State Bank of NSW. It was great fun, travelling the world at a time when Australian borrowers started using a wide range of offshore funding markets for the first time, and the Australian dollar became desirable for overseas investors.

But the Eurobonds we issued helped rich global investors to evade tax by hiding their wealth from tax authorities.

An excellent book called Moneyland by investigative journalist Oliver Bullough examines how global bankers developed ways for wealthy people to hide their investments, entering the world of oligarchs and thieves and corrupt governments. He demonstrates how powerful bankers and government officials in places like the Caymans, Channel Islands, Jersey, Ukraine, Russia and Luxembourg facilitated money laundering and hid billions on behalf of the world’s wealthy, making the bankers rich in the process.

The Eurobond market started in London when bankers developed a brilliant idea that created a financing and investment bonanza. Says Bullough:

“The idea of an asset being legally outside the jurisdiction that it is physically present in, is absolutely central to our story. Without it, Moneyland would not exist.”

The pivotal genius of the design was the use of bearer bonds. Whoever possessed the bonds, owned them. There was no register of ownership and no record of the investment. The bonds could be carried anywhere and sold, and the coupons snipped off to collect interest. This grand scheme was not only favoured by wealthy people, but the ordinary folk such as the legendary ‘Belgian dentists’ with a few thousand dollars to invest could buy bearer bonds at a local bank. 

Most Australians have little need for dodgy schemes

Reading the book made me think about the use of such schemes in Australia. Few people would expect to go to a financial adviser in Australia and hear about dodgy schemes to evade tax. There’s a good reason for this. We have plenty of ways to avoid paying tax that are completely legal and commonly used.

But it raises the question of where tax revenue will come from in future. The 2023 Intergenerational Report (IGR) has triggered a debate (again) about the future reliance on personal income tax to fund budget expenditures, and the burden this will place on future workers. Former Treasury Secretary Ken Henry called it an ‘intergenerational tragedy’, adding in an ABC Radio interview:

“It’s the young people who are going to be the workers of the future. People who are weighed down with HECS debt, who are going to have to repay a mountain of public debt, who are dealing with the consequences of climate change … who are facing diminishing prospects of ever being able to afford a home of their own. These poor buggers are also going to be the ones who are facing ever-increasing average rates of income tax.”

According to the Australian Bureau of Statistics (ABS), there are 4.1 million retired Australians, and they have at least as many children expecting to inherit their wealth. That's millions of voters with a vested interest in the current system. A recent speech at the Press Club by Treasurer Jim Chalmers shows he recognises the problem although he avoids any meaningful policies to support his ambition.

“In fact, around 40% of the projected increase in spending that’s outlined in the IGR is due to us getting older. Here, at this generational fork in the road, we can shape the future on our terms. We can turn these turbulent twenties into the right kind of defining decade.”

Given the outcry about the strain on future generations, what are some common ways Australians avoid tax which might demonstrate why the Government is reluctant to make major changes?

(Tax ‘evasion’ means concealing income or information from tax authorities whereas tax ‘avoidance’ is legally reducing tax).

10 common ways to avoid tax

Millions of Australians are well-practiced at avoiding tax. It’s almost a national pastime. These techniques are not complex derivatives, offshore companies, special purpose vehicles or money hidden in the Cayman Islands. These are not only legal but part of every financial advisers’ kitbag.

1. Invest through superannuation

According to the IGR, total superannuation balances will grow from 116% of GDP in 2022-23 to 218% by 2062-63, as shown below. Despite the ageing of the population, the vast majority of assets will continue in the accumulation phase, but assets in tax-free pensions will reach two-thirds of GDP from the current 28%, an increase of 129%. Accumulation assets will increase by a more modest 75%. That's more money paying less tax.

Future assets in retirement phase are significantly higher as the system matures and more Australians will have received the Superannuation Guarantee for most of their careers, rising to 12% from 1 July 2025. The proportion of people drawing a superannuation pension will increase from 8% to 19% of the population over the next 40 years.

Despite numerous rule changes, the current Transfer Balance Cap is $1.9 million per person, expected to rise to over $2 million at the next indexed increase on 1 July 2024. So a couple can soon hold over $4 million in assets in a tax-free pension. Assuming it is simply placed in term deposits at 5%, that’s $200,000 a year tax free.

For people too young to be eligible for a superannuation pension, the system offers many ways to avoid or reduce tax, such as salary sacrifice, spouse and co-contributions. 

2. Leverage into the family home

It’s the sacred cow, the place where most Australians have accumulated their tax-free wealth through high leverage. And the older a person, the more likely they are to own their own home. The chart below from the Retirement Income Review shows home ownership for people aged 65 and over is higher now than 40 years at about 82%, while it is significantly lower for people aged 24 to 34 years.

In addition to avoiding tax on the sale of their biggest asset, the family home is excluded from social security tests such as eligibility for the age pension.

Who needs a Caribbean tax haven when they live in and own a piece of Australian residential real estate? The tax treatment is the main reason why Australians have the most expensive houses in the world after Hong Kong. According to Demographia, Sydney is the second least-affordable housing market in the world, ranking 93rd in affordability out of 94 markets.

3. Earn tax-free income outside super

The general tax-free threshold for Australian residents is $18,200. However, a combination of the Low Income Tax Offset and the Seniors and Pensioners Tax Offset pushes the effective tax-free threshold to $29,783 a person. A couple can earn $59,566 outside superannuation and pay no tax.

Many older people should consider moving their investments out of super to avoid the so-called ‘death tax’ payable when superannuation is inherited by a non-dependant.

4. Pass wealth to the kids

There are no inheritance or death taxes in Australia, and beneficiaries do not need to pay tax on money received as part of a will. In many other countries, inheritance taxes are major estate planning factors. Generally, capital gains tax (CGT) does not apply when a dwelling is inherited, but it may apply later when the property is sold. An inherited property may retain its principal place of residence status but this depends on the treatment by the deceased and beneficiary. There is an exemption from CGT if a property was the main residence of the deceased and it is sold by the beneficiary within two years, or acquired before September 1985. There are conditions allowing the extension of this two-year rule.

There is a super ‘death tax’ when the taxable component of superannuation is inherited by a non-dependant, taxed at 15% plus the Medicare levy. While a spouse is always considered a dependant, adult children are not. The obvious way to avoid this tax is to withdraw the money from superannuation tax-free before death and leave it outside the superannuation system. Some people appoint an enduring power of attorney which permits the attorney to withdraw money in cases where someone loses capacity near death.

5. Receive franking credits  

There is a lot of misunderstanding about franking credits, and a longer explanation is in this article called Franking Credits Made Easy.

There is a key change coming in the Stage 3 tax cuts which are expected from 1 July 2024. The 30% tax rate is legislated to apply for the $45,000 to $200,000 tax bracket.

Our tax system allows tax already paid by a company to be refunded to a shareholder. For example, if a company makes a profit of $100 and pays company tax of $30 at the 30% rate (smaller companies pay at 25%), the company may fully distribute the profit after tax of $70 by declaring franked dividends to shareholders. The ATO ‘imputes’ or ‘credits’ the tax paid by the company to each shareholder.

When shareholders complete their tax returns, they add the $70 of dividend to the $30 of franking to declare the $100 of taxable income. The $100 of company profit is then subject to personal marginal income tax rates. Up to the $200,000 threshold (or lower for smaller incomes), shareholders pay tax on the $100 at 30% and claim the $30 that was already paid by the company as a tax credit. The shareholder pays no additional tax when receiving a fully franked dividend.

6. Negative gear investments

The term ‘negative gearing’ is not mentioned in any tax legislation, but it is familiar to millions of Australians as a technique to manage or eliminate tax. Where expenses, including interest paid on borrowings, on an investment are greater than income earned on the investment, the loss can be charged against other income, such as salaries and wages. The asset does not need to be residential property but that is the most common personal use.

The Parliamentary Budget Office (PBO) estimates that the annual cost to the budget of housing investors claiming deductions against other income will exceed $20 billion a year by 2032.

7. Top up with insurance (investment) bonds

Investment or insurance bonds are offered by life insurance companies and are subject to company tax rules. Tax is payable at the company tax rate, and if the bond is held for at least 10 years, earnings are not included in the investor’s tax return. These bonds are commonly used to pay for a child’s education, often purchased by grandparents, with no need to record or declare the earnings if held for 10 years. While this investment is not strictly ‘tax free’, the individual holder does not need to pay tax. Previous articles provide more detail including tax treatment if withdrawn prior to 10 years.

8. Distribute income using family trusts

A family trust is a discretionary trust used to hold the wealth and assets of a family. A trust is a legal structure under which the trustee holds the legal title to investments for the benefit of other people, the beneficiaries. The trustee has the discretion to distribute to the beneficiaries who are usually members of the same family. Trust income distributed is taxed at the marginal income tax rate of the beneficiary. Generally, the trustee allocates more distribution to the family member with the lower marginal income tax rate, thereby reducing the tax paid on the trust income. This might include adult children who have no other income, or are below the income-free threshold, and therefore pay no tax.

9. Use favourable capital gains treatments

CGT is only incurred when an asset such as an investment property or shares is sold, giving the taxpayer more control over the timing of a liability than on personal taxable income. Capital gains are reported in the normal income tax return and any capital losses can offset the CGT. Another asset can be sold at a loss to offset a CGT liability and a CGT discount of 50% can be claimed for assets held more than a year.

The Australia Taxation Office is also generous in allowing taxpayers with a capital gain to select a favourable purchase price using several methods, including First In First Out (FIFO), Last in First Out (LIFO) and Average Cost. This discretion can significantly reduce the CGT liability.

Care should be taken with investments to ensure a capital gain is not converted to taxable income. For example, an investment in a managed fund in June that receives a distribution in July may be converting capital to taxable income. If the unit price is say $1.00 and then a 10 cent per unit distribution is made on 30 June, the unit price will fall to 90 cents at the beginning of July. The 10 cents will be taxable income in the hands of the unit holder.

In superannuation, it is possible to avoid CGT on an asset bought during the accumulation phase but sold after a switch to pension mode where no tax is payable. There are tips to doing this correctly as explained here.

There is also a lifetime exemption from CGT of $500,000 from the sale of an active small business.

10. Make donations to charity

Of course, nobody is proposing a change to the tax deduction of charitable giving, but no list of ways to reduce or avoid tax should overlook the most altruistic. A tax-deductible donation to an Australian Deductible Gift Recipient (DGR) is a simple way to reduce tax. Public and Private Ancillary Funds are structures that generate an immediate tax deduction with the donations made later. It requires a tax invoice and the correct status of the charity can be checked on the Australian Business Register here.

Keep it legal

In Australia, there are plenty of ways to avoid tax without incurring the wrath of the ATO or hiding money in a Caribbean island. However, given the revenue needs outlined in the IGR, and Treasurer Jim Chalmers' desire to "shape the future on our terms" and "turn these turbulent twenties into the right kind of defining decade”, then at some point, tough decisions will be needed on many of the ways tax is collected and more importantly, not collected.

But for now, anyone using these opportunities should ensure every step is taken with full knowledge of the correct tax treatment or penalties may be imposed. The tax treatments outlined in this article are common but there are procedures to follow, and guidance from a tax professional is always beneficial.


Graham Hand is Editor-At-large for Firstlinks. This article is general information, not taxation or personal advice, and is based on an understanding of relevant legislation. Individuals should seek advice from a financial advisers or tax accountant before embarking on any of the strategies outlined in this article.


September 06, 2023

Thanks Graham. I enjoyed the article. On Super there is also an opportunity, provided you have the funds, to top up unused contribution cap while super balance is<$500k. Even better if this can be done via salary sacrifice.

Tom Taylor
September 04, 2023

Graham avoid? As Kerry Packer so succinctly put it to the senate review committee. "You bastards are not doing such a good job that I want to give you any more". One of the major reasons Australians have such a high standard of living is because the family home remains with the family. When ever I hear the bleating about so called tax reform I know my ass(ets) are at risk and the real purpose of tax reform is to bend the productive element of society (the 20%) and drive it home. Governments have never been there to help us they are only there to control us and remain in power.

Peter C
September 05, 2023

Kerry was wrong and selfish with his attitude. Taxes are the price we pay for a civilised society.

Randall K
September 04, 2023

Yes I agree with quite a few comments here. On superannuation, firstly it is forced setting aside of individually earned money. This money is invested at the risk of the owner who should be compensated for the sacrifice. Government does not miss out as the input is immediately taxed as are the earnings over many years. It is a never ending risk free money stream for Government. Not even close to avoiding tax. The franking overstatement has been adequately covered by others. Think you could do better than this Graham. When turning to the IGR and the higher level aspects, and thinking of the growing pool of super savings, I think the real struggle is simply about power. As indicated in the editorial, the politicians are all about holding onto and exercising power, a force/passion that can never be satisfied. But perhaps it can be held in check by the 'interest' (not a passion) of private wealth. What super is doing is building up wealth, especially in the middle classes and therefore rising to challenge politicians. We are moving from a situation where most citizens were given Government/community funded pensions for retirement but which expired on death with nothing being passed on to the following generation. We now have a growing pool of private money/wealth which has the potential to be passed on, at least in part. As can be seen via the Treasurer's voice, the political class is increasingly desperate to moderate the growing challenge of super savings. Or at least force it to invest in what the Government, not the individual money owner wants. The IGR is actually a tool to play generations off against one another and as a means of getting the decisions about this private wealth more in Government hands whilst avoiding tackling the overall issue of taxation.

September 04, 2023

Say I have a SMSF a under $1.9 million. The SMSF a is then changed from Accumulation phase to Pension phase. Included in this $1.9 m are ANZ & WBC shares which are nursing unrealised capital loss, for they were acquired before the Financial crisis. This unrealised loss is gone for good because the portfolio is in Pension phase. ( Furthermore, some shares in SMSF a that are unrealised capital gains may become unrealised cap loss if the market goes south ). So this Pension phase is good if there is no loss. But what if there is cap loss later, say when the shares needed to be sold, so there are funds to be withdrawn ? I know it is best to have enough cash to ride out when the market is down, and only sell when there is a gain. basically i am asking ' the realised cap loss ' is really something that the superannuant has to bear. Unless there is another way which I cant figure out. Your comments are welcome

Simon M
September 04, 2023

Before converting your SMSF from accumulation to pension phase, best to sell any shares which are running at a loss and then offset that loss against gains from other shares held. However as you noted, once your SMSF is in pension phase, there's no ability to offset losses.

Graham W
September 03, 2023

Graham, number 11 is prior to retirement if legally possible run your business through a company structure.
You can still use up all the tax free thresholds and super deductions. Any extra profit made by the company is taxed at 30%. This builds up the company's Franking Account. Assuming that you have no taxable income when retired you pay yourself franked dividends from your company. Say $14,000 dividend with a $7,000 franking credit means a nice $7,000 refund. Keep this up until you use up all the credits. Worked for me.

September 03, 2023

"$14,000 dividend with a $7,000 franking credit means a nice $7,000 refund":

SAPTO, spouse, 25% company tax; Each $22,337 dividend, $7,445 franking credit = $29,782 gross, $0 tax.

September 04, 2023

"SAPTO, spouse, 25% company tax; Each $22,337 dividend, $7,445 franking credit = $29,782 gross, $0 tax.":

However; +$1 gross income, 31.5% tax.

Leave in company, 25% tax.

Commute super to accumulation to avoid mandatory disbursement, 10% or 15% tax.

September 05, 2023

"Leave in company, 25% tax.":

However; while personal income tax immediately 'disappears' forever, and franking credits only decay with inflation and lack of earnings, if +$1 personal gross income is taxed at 31.5%, when, if ever, will the +$1 of dividends + franking credits be paid to shareholder?

"Commute super to accumulation to avoid mandatory disbursement, 10% or 15% tax.":

However; super disbursement account taxed 0% runs down due to net of mandatory withdrawals and earnings while the personal account taxed at 31.5% runs up due to mandatory super withdrawals and personal earnings giving a combined tax rate of around 15%, which is similar to the super accumulation account. Net result, (0% + 31.5%) / 2 and 15% close to the same outcome.

To spend more than personal tax free threshold: pay 31.5% tax on each +$1.

September 03, 2023

And the instant asset write-off up to $65,000 (which falls to $20,000 on 1 July) and full expensing allows small businesses to immediately deduct the full value of a capital investment. That buys a decent ute.

Philip - Perth
September 04, 2023

Yes, Brian, it does...but when you trade-in that ute for (say) $40,000 in a few years, that $40,000 is 100% taxable profit! Good luck with avoiding THAT one!

Jon Kalkman
September 02, 2023

In Australia, company profits are taxed only once in the hands of the shareholder. This means the shareholder needs to declare as their taxable income, not only the dividend they receive, but also the tax the company paid before the dividend was paid.That way shareholders pay tax on all their share of the profit, not just the portion paid out in dividends. The tax they pay on that higher taxable income then depends on their personal marginal tax rate.

It means the shareholder is responsible for tax on income (held by the ATO) that they never see but, because it held by the ATO, it becomes a tax credit (called a franking credit) that can then be used to pay some or all of their personal tax liability. If the shareholder's tax liability is less than the tax credit they are entitled to a cash tax refund in the same way that an employee gets a tax refund if their employer has over-paid tax on their behalf. So a franking credit refund is a tax refund only because it comes from the ATO, but it actually a refund of taxable income on which no tax is payable.

If there were no company tax, and all profits were distributed as dividends, shareholders would pay exactly the same tax as they so now and taxpayers on low marginal tax rates would have the same after-tax income as now. The big difference would be that foreign investors would then pay no tax in Australia. At least now the 30% company tax is extracted before they receive their dividends, and they cannot access franking credits.

Franking credits are hardly tax avoidance when they actually mean that the true taxable income that Australian shareholders derive from Australian shares is usually 42.8% higher than the dividend alone. That higher yield is seldom acknowledged when comparing asset classes.

September 03, 2023

Once again Jon ,I'd give up on it.You can lead a horse to water.,....etc .Two things that will always be denied. Compounding and franking credits ( tax paid).

Buffett explains compounding by the price of a BRK A share .Compound $13.50 for 58 years @20% and the answer is $528K,close enough to being roughly right.

That's twice you have caught me with the 42.8%.I calculate it the other way,start at $100 and finish up with $70. You start with $142.80 and finish up with $100.,still a 30% franking credit ( tax paid).

As said taxed at marginal rates.As reporting season ends perhaps the largest individual tax payer in Australia will get a nice bill next year.Dividend of $1 per share,he owns 1 billion shares ( rounded ),so $1 billion into his bank account and $428 million to the tax office from the registry.Recent events have changed this of course,and it depends on how his tax affairs are structured .

Jon Kalkman
September 03, 2023

Company makes $100 profit. Company pays $30 tax (30%), shareholder gets $70 dividend.
Shareholder’s taxable income is $70 dividend PLUS $30 franking credit = $100
Shareholder’s tax payable on $100 depends on their personal marginal tax rate.
Taxable income ($100) is 42.85% higher than the dividend alone ($70)

September 01, 2023

Just increase the GST to 15%, make it apply to everything to reduce confusion, and charge 5% tax on account based pension income. Done deal problem solved!

September 02, 2023

Or cut spending, shrink government. Problem solved!

September 03, 2023

Or curtail expectations of material expectations (another car, the third fridge, an overseas holiday, McMansions...) to match needs rather than the mythical Joneses. Problem nipped from the demand side.

Steve F
September 01, 2023

I think it's quite disingenuous to include franking credits. They are by their very definition tax already paid. Saying they are tax avoidance is like saying when an employee has PAYG tax taken out by their employer, but then gets a tax refund at the end of year because it was too mauch tax for their situation, is tax avoidance as well. Time and time again I see people misunderstnding or misrepresenting franking credits. It's tiresome.

Bob T
September 20, 2023

Yes, but . . . what sayeth that taxes paid by dividend-issuing company on funds used to pay dividend shouls be credited to dividend recipient in the first place? Set against background of no imputation (or other dividend tax reductions) overwhelmingly among countries of the world, franking credits are a "gift". And, with the exception of value added taxes, the general tax philosophy worldwide, is that income is taxed at each stop as it flows from taxpayer to taxpayer. The more that that money changes hands, the more taxes paid without credit for taxes paid by prior party in the chain.

September 18, 2023

"but . . . what sayeth that taxes paid by dividend-issuing company on funds used to pay dividend shouls be credited to dividend recipient in the first place":

Income tax on gross wages paid to company employee is imputed to employee.

Company tax on gross dividends paid to company shareholder is imputed to shareholder.

"no imputation (or other dividend tax reductions) overwhelmingly among countries of the world":

Making messy tax and tax avoidance systems.

September 19, 2023

You obviously are like many others that don't understand how the franking credit system works.

Not all companies pay Fully Franked or partially Franked Dividends, some such as REIT's pay unfranked dividends.

Regardless of how they are paid, the tax implications for the recipient are the same. The dividends become income and are taxed at your marginal rate. All the franking credit means is if your marginal rate falls under 30% you get some of that money back. If it is over 30% you still have to pay the difference.

If you're in a position where you are not required to pay tax, you get it all back.

There is no fleecing of the system going on.

September 01, 2023

Levying taxes to finance state expenses (unrealistically ignoring waste, pork-barelling and fraud) is taxing. Stellar inquiries are invariably rewarded with seminal ideas gathering dust in parliamentary archives, as the famous forlorn look of Ken Henry in the photo of his report presentation shows.

Graham Hand's useful tabulation of legal ways of avoiding tax rests on many unspoken axioms of our regime:
1. Those able to 'salary sacrifice' into super convert taxable income into taxfree (taxed at super's concessional 15% relative to individual rates).
2. The artificial distinction between capital gains on assets held for more than a year and others ignores that money, however derived, is spendable.
3. Legal ways to avoid otherwise taxable income (earnings on taxfree gifts to lower taxed relatives) get more attractive with increasing wealth.
4. Our visceral antipathy to inheritance tax implies the living will pay for the bequests of the dead enjoyed by their live dependents, ignoring the ongoing societal costs of inherited wealth.
5. The excitement of engendering self-funded retirement through compulsory and concessional super has blinded us to the costs by way of foregone taxes, which the IGR has revealed. Policy corrections to rectify the gaps such as caps on contribution and balances in pensions phase offend our entitlement mentality as bureaucrats think up Orwellian ways of catching up (as with the announced 30% tax on super above $ 3 million, including unrealised gains).
6. Our purported system taxing the global income of residents is not matched by effective policing and implementation, as other revenue agencies are pre-occupied with their own priorities.
7. To work as intended, our self-assessment system demands that the average taxpayer can feel confident the system is fair and equitable in design and implementation. This does not happen when ATO declares that taxpayers following its own advice later shown wrong will not be penalised (no penalties apply to the ATO for the wrong advice). The stories of Wickenby, Pluto and Panama participants stealing billions with impunity decimate trust. Consultants sworn to secrecy have been trading government confidence for enhancing partner profits. Just like the Part IVA anti-avoidance (against confected schemes), we need a counter-part ("ATO will not bring the system into disrepute").

September 01, 2023

To David C; Yes. Income derived by a minor from a Testamentary Trust is taxed at normal tax rates, not the maximum marginal tax rate applied to the unearned income of a minor above about $450. Discretionary Family Trust income to a minor would be unearned income.

Phillip Stewart
September 01, 2023

"The shareholder pays no additional tax when receiving a fully franked dividend." Correct, but tax is being neither avoided nor minimised. Frankly (pun intended) it is really no different to the way the tax system works in relation to wage earners. The employee receives a net wage which is then grossed in the taxpayer's tax return by the amount of PAYGW tax remitted to the ATO by the employer. This is never considered controversial but in practical terms it operates in virtually the same manner as the dividend imputation system. In both cases income is withheld from the taxpayer who then grosses up the amounts withheld in their tax return, and receives a refund or not depending on his or her personal circumstances.

As an aside, you didn't mention the situation regarding base rate entities (broadly speaking - private companies in the small business sector) who pay company tax at 25% in the dollar. Dividends paid by these companies therefore carry only a 25 cents in the dollar franking credit. Inevitably top-up tax will have to be paid on such dividends.

Bruce Barrie
September 01, 2023

Absolutely correct on franking. Mr Hand, I am sure wrote several years ago as franking should be treated as a pre tax. Franking is not a way of avoiding tax but suddenly being included in this article it’s suddenly treated as if it is. 

September 01, 2023

It's a long stretch to equate tax minimisation with tax avoidance (even though I think you were trying to hope the reader would read this as "evasion"!) by the use of legitimate means. To equate tax not paid in the super system, or primary place of residence, with overseas tax havens, where money is deliberately hidden in complex investment structures, is offensive and will get a lot of peoples' backs up. For a start, saving via the superannuation system for which it was designed, and which all Australians must contribute to build for their retirement, are not doing so to avoid tax, because no tax is payable (like saying you are avoiding driving in to a brick wall; because there is no brick wall). So it's not avoidance, no matter how you try to conjure up an argument that it is. I'm surprised with you Graham; you can do better than this nonsense.

Graham Hand
September 01, 2023

Well, Bryn, I clearly distinguish between evasion, which is hiding investments, and avoidance, which is legal, and while you might read it as "hope the readers would read this as evasion", there was no such intention. In fact, I make a point of saying that Australians don't need to go down the evasion path because there are so many legitimate opportunities. You can be "offended" and "surprised" all you like.

September 01, 2023

I perfectly understood the above article, Graham. Thank you. I'm already implement some of the strategies.

August 31, 2023

Regarding franking credits and the 30c in the dollar tax rate applying up to $200,000 income from 01/07/2024, I don’t think a government will be able to politically wear that an individual is able to earn that amount from franked dividends and pay no tax or receive a refund to be paid. I believe that franking credits will be limited to a cap.

August 31, 2023

Well, Peter, tell that to Bill Shorten who might have been PM for the last four years if he had not run this capping policy.

September 01, 2023

Peter,that person is paying tax

September 02, 2023

If I receive my CBA dividend and then pay no tax because of the franking credit, feels like avoiding tax in my hands.

September 02, 2023

"If I receive my CBA dividend and then pay no tax because of the franking credit, feels like avoiding tax in my hands.:

If you receive your CBA wage and then pay no tax because of the income tax credit, does it feel like avoiding tax in your hands?

September 01, 2023

"$200,000 [gross] income":

If all from dividends from company profits taxed 30% then:

. Dividends received = 200000 * (1 - 30%) = 140000
. Franking credits = 200000 * 30% = 60000

. Gross taxable income = Dividends received + Franking credits = 140000 + 60000 = 200000

. Tax assessment:
.. Income tax = 60667
.. Medicare = 4000
.. Franking tax credits = -60000
. Tax payable = -4667 (refund)
.Total tax paid = 60000 + -4667 = 55333

September 01, 2023

Tax assessment:
.. Income tax = 60667
.. Medicare = 4000
.. Franking tax credits = -60000
. Tax payable = 4667
.Total tax paid = 60000 + 4667 = 64667

Employee wages + income tax = 135,333 + 64667 = 200000

Greg Hutchison
August 31, 2023

Hi Graham. Agree with most of your sentiments.
However I cant agree that the future generation will be poor buggers.
I am a baby boomer who did it tuff like many around me. Sure we could buy a house cheaply but our salaries were significantly less.
We did not have all the benefits of modern life: NBN, Colour TV, no TV when I started, modern cars, we didn't have one when I was a kid. And then of course we didn't have mobile phones, not even flushing toilets for a while. And don't mention the health system. Crikey life is so much better and easier these days. And then there was the cane at school. These days kids are treated so much better. Not sure the lack of discipline is good for them however

September 03, 2023

If you read the Demographia report Graham provides a link to in his article you’ll understand that the cost of Australian property has risen far faster than incomes and “affordability” is now at a record low.

August 31, 2023

"Avoid" paying tax? Surely you mean "minimise"...

Graham Hand
August 31, 2023

I mean avoid. No tax on pensions, no tax on family home gains, offset income with losses on borrowings, tax-free thresholds, throw in a donation, etc, etc. Not difficult to set up affairs to avoid paying tax, if people want to.

September 01, 2023

Avoid is, as you would know, a word that attracts the attention of the authorities to illegal tax activities. Semantics perhaps, but I don't think using the entities you mention is tax avoidance. They ae simply not taxed.

David C
August 31, 2023

Are there not tax benefits also in income distribution from testamentary trusts, and these greater than from family trusts?

September 03, 2023

Correct David, they are taxed as adults without the punitive tax rates. Only problem is someone has to die first. Secondly the assets, or corpus, can only come from the estate. Jointly held assets bypass the estate and go to survivor if applicable, BDBN’s may keep super out of the estate and family trusts are not estate assets. If you artificially increase the corpus, including with debt, you lose the minor beneficiary tax advantages.


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