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Should I sign up for a scheme to reduce my tax bill?

I run a flower business and have had a great year, but my accountant tells me I am facing a big tax bill. She suggests that I could look at some agriculture schemes to reduce my pending tax bills. What do you think about them?

I hate people signing up for these schemes purely to reduce their tax bill. To me it creates the wrong idea about investments. These schemes should be seen as an investment that also brings a tax deduction.

If you do your homework on the product and the evidence says that this product has a bright future, then it could be a worthwhile activity to also reduce your tax. Of course, don’t rely on the evidence provided by the scheme promoter. Get on the internet and do some surfing.

By the way, accountants and financial planners have got into trouble for promoting bad schemes. They often receive a kickback from the promoter of the scheme. Also some schemes have not been given ATO approval and, some years later, the taxman delivers a delayed tax bill!

The big attraction of these schemes is that there is usually a borrowing component and, say, if you put $100,000 into the scheme, you could get a tax deduction of some $46,000 but it would all end in tears if the investment proves to be a dud.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice. 

Published on: Monday, April 19, 2010

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