The 9 Ways to Pay Less Tax: There is Nothing Else But These 9
There are a million tricks to pay less tax—we are just guessing; we didn’t count them—but all these just come down to nine things: the nine ways to pay less tax. There is nothing else but these nine.
To pay less tax you:
1 – Split
2 – Defer
3 – Offset
4 – Move
5 – Offshore
6 – Qualify
7 – Find
8 – Hide
9 – Downsize
That’s all. There is nothing else.
1 – Split
Splitting income is all about marginal tax rates. You move income away from a higher marginal tax rate to a lower marginal tax rate.
2 – Defer
Deferring income is also about marginal tax rates. You move income from a high-income tax period to a lower-income period to hit lower marginal tax rates.
3 – Offset
Offsetting income is about strategically claiming deductions, expenses or losses against your assessable income in the most tax-effective way, often using tax rate margins between entities.
4 – Move
You move your tax residency to a lower tax jurisdiction, for example, UAE, Singapore or Ireland.
5 – Offshore
You offshore operations, income or assets (for example Intellectual Property) to a lower tax jurisdiction.
6 – Qualify
You qualify for a tax incentive. Tax incentives are usually non-refundable, so you only benefit when you have a tax debt to start with.
7 – Find
You find a gap in the legislation or tax treaty – aka a loophole – that doesn’t cover a particular scenario, transaction or income. The problem with loopholes is that they don’t stay open for long.
8 – Hide
Hiding income is about receiving income in a way that makes it difficult to trace. That usually means cash. But it could also – for example – mean channelling income to entities with bearer shares and nominee directors layered across several tax havens.
9 – Downsize
When you downsize your income you pay less tax. This might be a conscious decision – you want to work less. Or it might be unintentional – you get so focused on saving tax that you neglect your business, miss profitable opportunities and waste money just to get a tax deduction.
So this is it.
These are the only 9 ways to pay less tax. There is nothing else. Everything we do as tax agents comes down to these nine things – actually, skip the last two, we as tax agents just work with the first seven.
Makes sense? Reach out when you are ready to pay less tax.