Salient: Victoria University of Wellington Students' Newspaper. Vol. 32, No. 3. 1969.
Beaut way to save tax —and legal
Beaut way to save tax —and legal
Australian students have been offered several thousands of dollars saving in tax for the cost of $1.
The proposal invites students to become "primary producers" for $1 and therefore qualify for taxation privileges.
The income tax of "primary producers" is assessed under a system "averaging income" over a number of years. Students would stand to gain considerably as their incomes rose.
The scheme was advertised in the University of New South Wales students' newspaper "Thrunka" by a Brisbane-based company which owned cattle ranches in Queensland.
The advertisement said most taxpayers did not become primary producers and thus missed out on "enjoying the privileges granted to the few"
To become a primary producer, it was necessary to carry on a business of primary production, either alone or with others. Operations should be big enough to support a family.
"To err on the side of caution, an investment of less than $20,000 to $25,000 would be suspect," the advertisement said.
In addition, the business must be full-time one, not just a weekender.
The advertisement said participation in the SI primary producer arrangements was safe, simple to establish, profitable and simple to end.
"How have we done it?" the advert asked.
"We have established a substantial farming and grazing business which is run as a business and which is operated by a trustee.
"For $1 you acquire an interest in this trust.
"You become a beneficiary under the trust and this secures your status as a primary producer.
"As a beneficiary, you are not liable for any business debts incurred by the trustees.
"Your continued financial interest in the business is maintained by payment of $50 per annum after you have saved the tax
"We have no means of legally recovering the $50; we rely on your honesty.
"No payment would be made to us if the tax savings fall short of $50.
"Thus, it is impossible to lose."
The advert said primary production was one of the most effective and safest means of reducing the tax burden.
But to achieve the maximum benefit, primary production must be entered into before one started to earn a high income.
The advert said all legal matters were "watertight".
The president of the Students' Union Council. Chris Humphries, told a Sydney paper that the council had "checked it all out, and it's quite bona fide."
An example of the savings that were possible was listed in the ad.
The example showed how a "primary producer" of six years' standing would save $1007 in tax in the sixth year alone.
This "primary producer" would have been a second-year student with an income of $400 a year in his first year in the scheme, and would have been earning $10,000 in the sixth year.
A spokesman for the company organising the scheme said it was doing it on the basis of tax discrimination. The present tax system discriminates against those who took the trouble to achieve a higher education and discriminates against the professional person.
"A professional person who earns the same income over the same period as a public servant up to the age of 30 has to pay 40 to 70 per cent more tax, and he has to pay provisional tax," he said.
"We increase the professional man's income, though relating the rate to the total tax over the period."