Is Tax Planning Worth It?

calculator with buttons for tax

Donald Trump Is Right (About Tax).

Now, generally I disagree with almost all of The Donald’s actions. But not on tax. If you are interested in legal ways of saving big money on tax when selling property, a business, or other large investments in Alberta, get in touch with me now at RMLO Law LLP.

Donald Trump’s advisers have called him a “genius” after reports that his $900 million loss in 1995 helped him avoid paying federal tax for the next 18 years.

“This is a perfectly legal application of the tax code and he would have been fool not to take advantage of it,” said former New York mayor Rudy Giuliani, one of Trump’s advisers.

“He’s a genius at how to take advantage of legal remedies that can help your company survive and grow.”

Speaking on ABC, the adviser said Trump has a “fiduciary duty” to maximise profits for his company’s investors.

New Jersey governor Chris Christie also called Trump a genius.

“There’s no one who has shown more genius in their way to maneuver about the tax code as he rightfully used the laws to do that,” he said on Fox News.

I notice nobody was accusing Donald Trump of anything wrong. Mostly people were saying that morally he should be paying more tax. Trump is entitled to organize his affairs under the law to his best tax advantage. And it’s not just Trump.

Apple does a lot of business in and from Ireland. The European Union (EU) has recently decided that Apple’s corporate and tax set up is offside EU rules. Result? Apple owes Ireland unpaid tax of €13 billion ($19 billion). Tim Cook, Apple’s head honcho, says the tax bill is, “total political crap.” Tim says Apple has abided by all rules and they don’t owe a penny in tax. The US government has lined up behind Apple. And the fight is on.

Whether Apple finally wins or loses is not the point. The point is that they organized their affairs to legally pay as little tax as possible, and the EU’s claim of $19 billion demonstrates pretty good success. They might end up paying some tax, but not $19 billion. All great, but why should you care about Apple?

While I don’t think any of us are worried about protecting the billions and billions of dollars that Apple makes, everyone with any kind of a business who is making a reasonable amount of money—including Donald Trump—must consider tax planning.

Martin Kenney is a Canadian lawyer based in the British Virgin Islands. According to his website, his law firm represents persons harmed by economic crime in a multi-jurisdictional setting. He thoroughly understands how tax systems work. Martin had a great article in the business section of the Globe & Mail on September 2, 2016 titled “Is There an Element of Emerald Envy in the EU Ruling on Apple?

Kenney reminds us of a number of things, such as:

Being tax efficient and operating within the confines of the laws of the land is tax avoidance-this is not a crime. Lying and misleading the taxman is called tax evasion, which is a crime.

He quotes from the famous (famous at least in tax circles) case of Inland Revenue Commission vs Duke of Westminster (perhaps the UK’s richest man) from 1936. Said Lord Justice Tomlin:

Every man is entitled if he can to arrange his affairs so that the tax attaching under the appropriate acts is less than it otherwise would be. If he succeeds in ordering them so as to secure that result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.

The Duke didn’t have to pay and this case continues to be cited when tax battles are fought.

Martin Kenney’s article and the principles cited are a great reminder that businesses and individuals are allowed, under the law, to organize their affairs to pay as little tax as possible. Safe, conservative tax plans can dramatically reduce your tax bill. And I mean dramatically! Are you selling a business or a piece of property or engaging in any other event that will trigger tax? Start planning now with real potential to save a bundle of money.

Early tax planning saves the most money.

What is early planning? At least two years before your tax triggering event. Strategies like corporate re-organization take time.

Message me now using the form below. Don’t delay! (Unless of course you want to leave a bunch of money on the table for the taxman…)

“Tax” image by Phillip Ingham on Flickr. Used under Creative Commons Attribution-NoDerivs 2.0