Rich enough to pay no tax

If you are rich enough to afford a great accountant, paying tax can be optional.

Some 70 Australians with incomes of more than $1 million each paid no income tax for 2010-11, new data from the Australian Tax Office has revealed.

The tax office figures show that those 70 wealthy individuals earned a combined $194 million but paid tax on less than $20,000 of declared income, reports Fairfax.

That works out to around $1 of taxable income for every $9,999 of untaxed earnings.

A small group of 30 individuals in this wealthy group claimed deductions for tax advice, indicating they paid their accountants and lawyers some $33 million.

For the wider group of 70, deducting tax losses from earlier years cleared most of their tax obligations. During the 2010-11 financial year, they claimed $118 million in prior tax losses between them.

10 in the group claimed losses averaging $207,000 on farms they ran while five who were negatively geared on rental properties claimed losses of around $260,000 each.

A further 20 in the group claimed tax deductions for charitable donations of around $1 million each.

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Thankfully for the Australian Tax Office, this small group of 70 was not representative of Australia’s millionaires.

The tax office report showed that over 99 per cent of Australia’s millionaires did pay a substantial amount of tax in 2010-11, some $8.74 billion between them.

To put that in perspective, this 0.1 per cent of wealthy taxpayers stumped up almost 10 per cent of all income tax paid by the nation.

The research does however show that tax avoidance among Australians is not uncommon, with one in four Australians submitting tax returns paying no tax at all.

Among those who paid no tax at all were a group of 2300 individuals with declared incomes of more than $100,000.