Thanks for the video, very informative. I have a question though, at 4:40, when you talk about Loans. You say the rich borrow money from the bank to use as spending money, and use their assets as collateral, thus avoid paying taxes. But then, what money do they use to pay back the loan?
@@smokey6455 I'm trying to figure out the same thing.... It wouldn't make sense to sell their stocks or accept dividends which are a taxable income which then decreases their portfolio which then decreases the collateral they can use against a loan. Is it in the wording? They don't pay income tax, but they do pay interest on their loans which is the lesser of the two? Then in order to pay for the interest on the first loan, they get a new loan against their newly successful portfolio thanks to inflation and growth... do they repeat this until they die??
@@smokey6455 there's no need to pay back the loan basically ever, they're spending such a small amount of money compared to what they're loaning against, it doesn't impact them, e.g. If I have a 200m share portfolio making conservatively 6m a year, I don't care if a bank charges me 8% interest on the 1m a year I'm spending, when I decide to settle up in 20 years, I pay out the 50m total owing, 20m plus interest, but in the same time I made 120m from my investments I'm still up 70m and paid no taxes!
Thanks for another great video Raymond :) I'm 26 and working full time in local government. For the first time this year I've had to pay tax because the LITMO ended. I imagine a lot of others are in the same boat. I already salary sacrifice but might try to increase it. I'd love to see a video regarding the medicare levy surcharge that you get at 31 and the tax benefits of private health insurance. Have a great day!
Great to see that you've been consistently salary sacrificing, I think as long as you don't need the extra money then salary sacrificing more is never a bad idea!
This comment angers me, your salary sacrifice works differently to all us hard working Australians that’s why you have to pay tax because your getting a SHT load more tax free money put back into your account from salary sacrifice, government is fkd
Non government workers only have 1 option to salary sacrifice which is put it in your super and still be taxed at 15% instead of 32.5% however government workers can salary sacrifice MUCH more and the exact dollar figure that was sacrificed is put back into their own personal bank account TAX FREE, my mum does it she sacrifices 600$ and 2 days later is payed 600$ so it lowers her tax bracket and also is given back 600$ tax free, absolute criminal the government is corrupt, this year 900 BILLION dollars was taxed and we’re do us tax payers see any benefit what so ever? We see fk all, corruption at its finest
@@leonmorris5602 my tax works the same as everyone else?? I salary sacrifice into super. Not a novated lease or anything.... i dont get your point? I still have the same tax free thereshold and am PAYG not salary. No fringe benefits in local government.
So as far as I can tell they would still make less money from rental losses through negative gearing and just makes it safer waiting for the price of the house to go up by reducing tax on their income until they can be sold for profit later on. So like negative gearing + selling the house for higher profit am I on the right track?
About the capital gains discount section. You said, if I was to sell $200,000 of shares and I had held those shares for over 12months. I would get a 50% discount making me only have to pay tax on half at a rate of 12.4%. But, to invest $200,000 you have to make $200,000 therefore I am still taxed on that $200,000 earned income and have to pay $60,000 in tax. Therefore my investment would be $140,000 and I would need a capital gain on that investment of $60,000 to break even on the tax I paid originally, which means if I made $60,000 capital gain on my $140,000 investment I would receive a CGT discount of 50% on that $60,000 and have to pay $11,000 tax and would have made $48,000 and I also wouldn’t have been able to spend or invest that money for 12 months. Also, if I was to go and buy cars or anything stupid, I would pay taxes on those purchases also. Resulting in losing more money. Another thing, investments don’t always go well so I’m risking losing more than the initial tax amount. Summary, doubled taxed, risk on investment and additional spending taxes. Correct me if I’m wrong, but this doesn’t seem like a viable solution considering the time it takes and the risks required.
I think what was not properly explained in the video was the cost base of the investment vs the total return, which includes a profit i.e. "capital gain". So If I first earnt $200,000 and paid $60,000 in income tax leaving $140,000, then invested the $140,000, held it for over 12 months, then sold it off and had a total result of $200,000 I need to first subtract my cost base (which I've already paid tax on) of $140,000, leaving me with $60,000 capital gain but I only need to pay a CGT on half of that, which is $30,000, and at my marginal tax rate. If I earnt nothing else that tax year; * the first $18,200 is tax free * the remaining $11,800 is taxed at 19%, which is $2,242 .....so even though I sold all my assets and received $200,000. I only had to pay $2,242 (not tax advice)
Read an article that stated that 77% of landlords only had 1rental property and that most of these were middle class mums and dads. So not necessarily rich. The issue is the value of those properties, esp as it IS the rich that have the commercial properties and they are worth way more than a house. I want to know how the hell people under 30 have multiple rental places, how the hell are they getting loans? I have struggled with each time i have refinanced and am on a good wage and have a hell of a lot of equity. I know if they had lent me the money i would have many rental places but they didn't lend me money.
Earn more, currently we are in a dual borrowing economy due to tax rates, minimum reportable expenses etc. Also look to redo the loan over 30 years, close unsecured debts, payout HECs to improve cash flow etc, get a lender that knows what they are doing and can include the proposed rental income, look to go to a bank that ads back negative gearing to increase lending etc
@ I am in the industry and can help but maybe reach out to a good mortgage broker. Teachers within dept of education usually get paid decently. Look to see how you can minimise the current mortgage debts by refinancing over 30 years again. If there is a salary packaging we can add that back to increase lending. Make sure to add the proposed rental income on the application, generally $550 per week which is conservative after investment expense equates to $220,000 in further lending right away.
It’s not just about income bud. It’s choosing the right property, using entities to hide debt, refundable LMI etc etc. immerse yourself to learn and stop playing victim. It’s holding you back
Great video bro. I was wondering if buying or building a house right now is a good investment decision as RBA continue to increase interest rates? Cheers bro :)
Hey mate, no one has a crystal ball as to how the interest rates will change overtime but I wouldn't bank on it going back down to the rates we had during COVID
When you said the rich people take out a loan and live off the loan - how do they pay it back? I'm quite new to this but it's very interesting to me. Thanks for the video 👍
They get very low interest rates compared to non-wealthy people, and pay them off on the schedule set with their normal incomes from bonuses, wages and investments. The interest rates are high enough that the lender benefits more than they would with risk free methods, but low enough that it's worthwhile for the wealthy person to take the loan rather than liquidate assets. If the assets grow in value or pay out at a higher rate than the interest, they win the gamble. If the assets don't, for whatever reason, they lose the gamble.
My Dad owned a civil construction business and keep 5% net profit after taxes& expensess the government total crooks since bob hawke . 10 million reveune not profit it costs pushed up by government @@raymondla
@@raymondla earning $45000 a yr fulltime . Everything tax much less in my born country in australia there more than 125 taxes why luxury cars & fuel expensive here . 2018 c63s back home is $67000 . No luxury cat tax " no stamp duty & no import duty
Are any of you getting a tax refund this year?
Thanks for the video, very informative. I have a question though, at 4:40, when you talk about Loans. You say the rich borrow money from the bank to use as spending money, and use their assets as collateral, thus avoid paying taxes. But then, what money do they use to pay back the loan?
@@smokey6455 I'm trying to figure out the same thing....
It wouldn't make sense to sell their stocks or accept dividends which are a taxable income which then decreases their portfolio which then decreases the collateral they can use against a loan.
Is it in the wording? They don't pay income tax, but they do pay interest on their loans which is the lesser of the two?
Then in order to pay for the interest on the first loan, they get a new loan against their newly successful portfolio thanks to inflation and growth... do they repeat this until they die??
@@australiasian I've been looking all over for the answer but can't find it. If you stumble across it, remember to come back here and let me know 😅
@@smokey6455 there's no need to pay back the loan basically ever, they're spending such a small amount of money compared to what they're loaning against, it doesn't impact them, e.g. If I have a 200m share portfolio making conservatively 6m a year, I don't care if a bank charges me 8% interest on the 1m a year I'm spending, when I decide to settle up in 20 years, I pay out the 50m total owing, 20m plus interest, but in the same time I made 120m from my investments I'm still up 70m and paid no taxes!
Thanks for another great video Raymond :) I'm 26 and working full time in local government. For the first time this year I've had to pay tax because the LITMO ended. I imagine a lot of others are in the same boat. I already salary sacrifice but might try to increase it. I'd love to see a video regarding the medicare levy surcharge that you get at 31 and the tax benefits of private health insurance. Have a great day!
Great to see that you've been consistently salary sacrificing, I think as long as you don't need the extra money then salary sacrificing more is never a bad idea!
This comment angers me, your salary sacrifice works differently to all us hard working Australians that’s why you have to pay tax because your getting a SHT load more tax free money put back into your account from salary sacrifice, government is fkd
Non government workers only have 1 option to salary sacrifice which is put it in your super and still be taxed at 15% instead of 32.5% however government workers can salary sacrifice MUCH more and the exact dollar figure that was sacrificed is put back into their own personal bank account TAX FREE, my mum does it she sacrifices 600$ and 2 days later is payed 600$ so it lowers her tax bracket and also is given back 600$ tax free, absolute criminal the government is corrupt, this year 900 BILLION dollars was taxed and we’re do us tax payers see any benefit what so ever? We see fk all, corruption at its finest
@@leonmorris5602 my tax works the same as everyone else?? I salary sacrifice into super. Not a novated lease or anything.... i dont get your point? I still have the same tax free thereshold and am PAYG not salary. No fringe benefits in local government.
You can't mention the cost amount of negative gearing without mentioning how much the government has made in positive geared property and sales
So as far as I can tell they would still make less money from rental losses through negative gearing and just makes it safer waiting for the price of the house to go up by reducing tax on their income until they can be sold for profit later on. So like negative gearing + selling the house for higher profit am I on the right track?
Nice work! Thanks for sharing this. I have been helping people around the world to Incorporate in Georgia 🇬🇪 sincr 2017! Here you pay just 1% of tax
About the capital gains discount section. You said, if I was to sell $200,000 of shares and I had held those shares for over 12months. I would get a 50% discount making me only have to pay tax on half at a rate of 12.4%. But, to invest $200,000 you have to make $200,000 therefore I am still taxed on that $200,000 earned income and have to pay $60,000 in tax. Therefore my investment would be $140,000 and I would need a capital gain on that investment of $60,000 to break even on the tax I paid originally, which means if I made $60,000 capital gain on my $140,000 investment I would receive a CGT discount of 50% on that $60,000 and have to pay $11,000 tax and would have made $48,000 and I also wouldn’t have been able to spend or invest that money for 12 months. Also, if I was to go and buy cars or anything stupid, I would pay taxes on those purchases also. Resulting in losing more money. Another thing, investments don’t always go well so I’m risking losing more than the initial tax amount. Summary, doubled taxed, risk on investment and additional spending taxes. Correct me if I’m wrong, but this doesn’t seem like a viable solution considering the time it takes and the risks required.
I think what was not properly explained in the video was the cost base of the investment vs the total return, which includes a profit i.e. "capital gain".
So If I first earnt $200,000 and paid $60,000 in income tax leaving $140,000, then
invested the $140,000, held it for over 12 months, then sold it off and had a total result of $200,000
I need to first subtract my cost base (which I've already paid tax on) of $140,000, leaving me with $60,000 capital gain
but I only need to pay a CGT on half of that, which is $30,000, and at my marginal tax rate.
If I earnt nothing else that tax year;
* the first $18,200 is tax free
* the remaining $11,800 is taxed at 19%, which is $2,242
.....so even though I sold all my assets and received $200,000. I only had to pay $2,242
(not tax advice)
Those who have everything, more will be given.
Those who have nothing, more will be taken
Only Until the ones with less educate themselves to copy the ones with more.
Read an article that stated that 77% of landlords only had 1rental property and that most of these were middle class mums and dads. So not necessarily rich. The issue is the value of those properties, esp as it IS the rich that have the commercial properties and they are worth way more than a house.
I want to know how the hell people under 30 have multiple rental places, how the hell are they getting loans? I have struggled with each time i have refinanced and am on a good wage and have a hell of a lot of equity. I know if they had lent me the money i would have many rental places but they didn't lend me money.
Earn more, currently we are in a dual borrowing economy due to tax rates, minimum reportable expenses etc. Also look to redo the loan over 30 years, close unsecured debts, payout HECs to improve cash flow etc, get a lender that knows what they are doing and can include the proposed rental income, look to go to a bank that ads back negative gearing to increase lending etc
@@dxsez am a teacher but see these under 30s earning less but getting loans. i have no other debts.
@ I am in the industry and can help but maybe reach out to a good mortgage broker. Teachers within dept of education usually get paid decently. Look to see how you can minimise the current mortgage debts by refinancing over 30 years again. If there is a salary packaging we can add that back to increase lending. Make sure to add the proposed rental income on the application, generally $550 per week which is conservative after investment expense equates to $220,000 in further lending right away.
@@sdeane09 two streams of income, you and a partner, brother etc will help tremendously in the current lending environment
It’s not just about income bud. It’s choosing the right property, using entities to hide debt, refundable LMI etc etc. immerse yourself to learn and stop playing victim. It’s holding you back
Great video bro. I was wondering if buying or building a house right now is a good investment decision as RBA continue to increase interest rates? Cheers bro :)
Hey mate, no one has a crystal ball as to how the interest rates will change overtime but I wouldn't bank on it going back down to the rates we had during COVID
When you said the rich people take out a loan and live off the loan - how do they pay it back? I'm quite new to this but it's very interesting to me. Thanks for the video 👍
They get very low interest rates compared to non-wealthy people, and pay them off on the schedule set with their normal incomes from bonuses, wages and investments. The interest rates are high enough that the lender benefits more than they would with risk free methods, but low enough that it's worthwhile for the wealthy person to take the loan rather than liquidate assets. If the assets grow in value or pay out at a higher rate than the interest, they win the gamble. If the assets don't, for whatever reason, they lose the gamble.
you didn't talk on paying 0 dollar in tax strategy
Hey Raymond, great video very helpful. I was just wondering what software you use to create the graphics in this video
Thanks! All the editing was done in premier pro
I moved to NZ from AUS so I can pay 0% tax for 4 years
Wait, what?! Haha
wrong you pay min of 40% taxes on min wage in australia add alot of hiden taxes
You’re saying someone who earns $15k per year will pay 45% in taxes?
what?
My Dad owned a civil construction business and keep 5% net profit after taxes& expensess the government total crooks since bob hawke . 10 million reveune not profit it costs pushed up by government @@raymondla
@@raymondla earning $45000 a yr fulltime . Everything tax much less in my born country in australia there more than 125 taxes why luxury cars & fuel expensive here . 2018 c63s back home is $67000 . No luxury cat tax " no stamp duty & no import duty
Duties " gst & excise taxes
Taxes are BS