I am about to receive $17,500 from a company and want to minimise the
amount of tax I will have to pay on the money. I live in Australia and
am a PAYE taxpayer, with my marginal tax rate in the top bracket. If
this windfall cheque is made out in my name I will have to bank it and
therefore pay 48.5 per cent tax on the money. I'd appreciate any
suggestions on how else the cheque could be made out - ie, could I set
up a private company to receive it? Or a family trust? Obviously I
want to do everything legally...
thanks

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Clarification of Question by crocokoala-ga on 13 Apr 2003 18:10 PDT

Dear Ace,

The payment is an advance on royalties

hope that helps

thanks

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Clarification of Question by crocokoala-ga on 04 May 2003 17:39 PDT

Dear omnivorous-ga,
thanks for your comment - ideally I'd like to find some way to avoid
paying so much tax on the money full stop. That said, delaying the
payment is better than nothing!

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Clarification of Question by crocokoala-ga on 04 May 2003 17:40 PDT

Dear drpauljbrewer,

that's a great idea, I'll look into it

thanks

Hi Crocokoala-ga

Can you please elaborate what this payment is for i.e. salary, bonus,
redundancy payment, golden handshake...

ace24-ga

48.5%!?  Ouch. Glad I don't live in australia!

Turn off the computer, call an accountant, and ask them if an "advance
of royalties" is a _loan_ or _income_ in australia.

A decent business accountant should be able to answer this decisively
for under $50. Give him time to look it up and call you back.

It is possible that it may be a _loan_ now and become income later.  

This may sound meaningless, but it does solve an important tax problem
should your project later prove not fully successful and you have to
repay some of the advance.

Crocokoala --

I trust that we can assume that tax DEFERMENT (pushing the tax
obligation into future years) is as important as minimization?