Tax deduction query
Discussion
Whilst my query relates to tax in Australia, the principle I'm trying to get my head around is the same.
Here, a business is allowed to make a tax deduction for the cost of relocation an employee from the UK to Australia.
Now, lets use some round numbers!
Say the business has to pay 20% tax on $100k and the staff relocation cost $10k. They now have to pay 20% tax on $90k, "saving" them $2000- right???
However, they'll still be $8000 out-of-pocket due to paying my costs.
What I'm trying to do is work out if its worth coming up with a proposal that is attractive to both me and my employer relating to relocation costs.
I have paid $10k to relocate myself but unlike many larger businesses, they have not paid this on my behalf.
Is there a creative way you can think of whereby the relocation costs could be refunded by them without actually costing them anything?
If it were a simple case of taking $10k off their tax bill, that would be an easy no-brainer as it wouldnt cost them anything.
Sadly relocation costs are not tax deductable at a personal level in Australia.
Here, a business is allowed to make a tax deduction for the cost of relocation an employee from the UK to Australia.
Now, lets use some round numbers!
Say the business has to pay 20% tax on $100k and the staff relocation cost $10k. They now have to pay 20% tax on $90k, "saving" them $2000- right???
However, they'll still be $8000 out-of-pocket due to paying my costs.
What I'm trying to do is work out if its worth coming up with a proposal that is attractive to both me and my employer relating to relocation costs.
I have paid $10k to relocate myself but unlike many larger businesses, they have not paid this on my behalf.
Is there a creative way you can think of whereby the relocation costs could be refunded by them without actually costing them anything?
If it were a simple case of taking $10k off their tax bill, that would be an easy no-brainer as it wouldnt cost them anything.
Sadly relocation costs are not tax deductable at a personal level in Australia.
Can't speak for Australia but why would the government or someone else pay for your relocation as that's actually what you're suggesting.
Unless there was some specific government scheme to encourage a certain trade or profession that was badly needed in the country, the only people 'benefitting' of your relocation are you and/or your new company.
To make things a tad more palatable, and as its most likely a genuine business cost, it's tax deductible, as in they made a smaller profit - they pay slightly less tax; not that it can be completely offset against the tax paid.
I am no accountant by the way, neither here or in Australia, just utilising common sense, which most of these regs are based upon.
Unless there was some specific government scheme to encourage a certain trade or profession that was badly needed in the country, the only people 'benefitting' of your relocation are you and/or your new company.
To make things a tad more palatable, and as its most likely a genuine business cost, it's tax deductible, as in they made a smaller profit - they pay slightly less tax; not that it can be completely offset against the tax paid.
I am no accountant by the way, neither here or in Australia, just utilising common sense, which most of these regs are based upon.
I wasnt expecting that relocation would be free. Just hoping for a creative suggestion on how I could get some money back.
My "man maths" logic tells me that they could give me $10k to reimburse my expenses, I then give $8k immediatly back to the MD. That way he's not lost anything and I've got $2k back.
My "man maths" logic tells me that they could give me $10k to reimburse my expenses, I then give $8k immediatly back to the MD. That way he's not lost anything and I've got $2k back.
200bhp said:
I wasnt expecting that relocation would be free. Just hoping for a creative suggestion on how I could get some money back.
My "man maths" logic tells me that they could give me $10k to reimburse my expenses, I then give $8k immediatly back to the MD. That way he's not lost anything and I've got $2k back.
That's not how I read your initial post? However, how about this, they pay your relocation fees and then for the next 4 months they pay you $2.5k/month less (4 months 'proving yourself'??) and then revert to your 'proper' rate after that? My "man maths" logic tells me that they could give me $10k to reimburse my expenses, I then give $8k immediatly back to the MD. That way he's not lost anything and I've got $2k back.
Bonus as you've actually paid your relocation costs from untaxed as opposed to taxed income (worth more than 20%?). Dodgy though? Will also depend on wether you have signed a contract?
I reiterate I've no real idea.
200bhp said:
I wasnt expecting that relocation would be free. Just hoping for a creative suggestion on how I could get some money back.
My "man maths" logic tells me that they could give me $10k to reimburse my expenses, I then give $8k immediatly back to the MD. That way he's not lost anything and I've got $2k back.
Nope that wont work, they would account for the 8k you give them back against the 10k, so could only claim relief on the 2k.My "man maths" logic tells me that they could give me $10k to reimburse my expenses, I then give $8k immediatly back to the MD. That way he's not lost anything and I've got $2k back.
Id be careful suggesting it as its all a bit fraudulent.
http://www.lafha.com.au/Home.aspx
I assume you are looking at moving to Australia? This may help you. I would suggest that if you want international tax advice, you find someone that knows what they are on about. There is all sorts of legitimate planning you can do to minimise cost to both employer and employee. However this advice isn't cheap. If you are seriously interested in obtaining some then feel free to PM me.
I assume you are looking at moving to Australia? This may help you. I would suggest that if you want international tax advice, you find someone that knows what they are on about. There is all sorts of legitimate planning you can do to minimise cost to both employer and employee. However this advice isn't cheap. If you are seriously interested in obtaining some then feel free to PM me.
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