Hi Scott,
I have just been told of a way I can save more money on taxes as a sole trader that is perfectly legal and above board. Apparently I can employ my 14-year-old son on minimum wage to help me as a personal assistant, thus giving me a deduction of up to $18,500 on my taxes. I know I would still need to pay him super. I would pay that money into his account and deduct things like school fees from those earnings, effectively paying for his education, but he would pay no tax as he would be under the tax-free threshold. He would get some pocket money and I would pay less tax and also help with his school fees. This sounds too good to be true. What am I missing?
Natalie
Hi Natalie
What you’ve described has the whiff of tax evasion to me.
This will be like a game of pong for the ATO’s supercomputers – they’re likely to hit you eventually.
So all I can say is be ready: you’ll need the appropriate work contracts, documented hours and specific jobs, plus a payroll system and super payments.
The tax office says: “There are heavy penalties for taxpayers that deliberately attempt to gain an advantage of the tax system. This behaviour can lead to criminal prosecution.”
Is it worth the risk?
Scott.