Tax.

The Guardian runs an interesting story highlighting that many folks in Australia that have an income over a million dollars per year end up not paying tax by reducing their taxable income to near zero.

The way they do this is fascinating. They spend almost a million on tax-return related expenses, such as accountants, lawyers and the like.

The only way that such an expense makes any sense is by a mechanism that I call “bill shifting”.

For example, they’ll run up a $1.5m bill for tax services to their business and a $50k bill for their personal income tax, using the same service providers 

Then the service provider will charge $1m for the personal services and $550k to the business.

The business won’t be paying tax anyway, so this is a gift.

There’s a simple fix; don’t allow business owners to use the same service providers for their business tax and personal income tax.