The subject of “tax loopholes” has become increasingly controversial around the world. There is a lot of resentment in the middle classes about the various – occasionally extremely complex — ways that high net-worth individuals and corporations structure their business transactions in order to reduce or, if possible, even eliminate their taxes. They are simply Tax Cheats.

The fact that so many people find tax shelters and other intelligently-structured economic transactions to be politically distasteful has given the whole arena of tax planning a bit of the smell of sulphur. So we consider briefly in this article the subject of tax planning from a general moral standpoint and then point out the great value of having highly-trained and experienced tax counsel on your team when you do the financial planning for your small business.

Economic Freedom

We are very proud to be tax accountants for small businesses. We enjoy the intellectual challenges of the work and of course, we enjoy the relationships with our clients who very often are years-long friends. The other issue, however, is a deep philosophical point. Australia is a stable democracy. And in a free democratic society, economic freedom is second in importance only to ideological freedom (freedom of conscience, of speech and of the press).

What you earn from your labours is yours to keep! That’s what freedom is. Now, of course, we must maintain the services of the government and for this reason, the People assembled in parliament have passed statutes that spell out the tax code. No Australian has any moral or other obligation to pay one penny more than he is required to pay under the written provisions of the tax code. If there are those who feel that certain tax provisions are inappropriate or that certain deductions are too generous – fine, let them come forward with a bill in the parliament, persuade the members there assembled and pass the bill changing the tax code.

In sum, people’s opinions about the tax code do not have the force of law and to the extent that they have any moral force, it is as an argument for amendment of the law, not as an argument that people should pay more tax than the current law requires. This argument is not entirely about vindicating the wholly self-interested agenda of individual citizens.

A very valid question exists about who can deploy capital more efficiently in society — a profit-motivated individual citizen or the government. Suffice it to say that we believe that minimizing our clients’ tax obligations within the bounds of the law is an honourable profession that makes a real contribution to society. Smart small business people employ educated and experienced tax accountant not only to minimize their tax obligations but most of them also do so exactly because they are conscientious citizens – they want to ensure that their claims truly are within the bounds of the law. Our goals are two-fold – to minimize your tax obligation AND to make sure you understand and comply with the law so that you pay your fair share.

Negligence

There are, of course, plenty of people who underpay their taxes and most of them, by far, are not witting, intentional criminals. People without a fully professional tax accountant can and do make mistakes. Many times, economic transactions are complex and the structure of a deal makes a big impact on the tax consequence. If you’re serious about your small business and about your honourable status in the community, you want to go from hoping that you get your taxes right to knowing that you did. Professional tax counsel makes the difference.

Tax Evasion

And then there are these guys…. Rather than spend their time imagining better ways to improve their margins in their business or attract new customers or extend their business into new and more profitable lines, they are attracted to short-cuts like knowingly cheating on their taxes.

We do not work with such people. The legal consequences of tax fraud are one obvious reason to avoid businesses that cheat on their taxes. But there’s a broader issue as well – people who take shortcuts in life by cheating on their taxes invariably take short-cuts in a hundred other ways as well – in their marriages and families, in their personal finances, in their business dealings. Outright tax evasion – as opposed to smart tax planning – is illegal, immoral and almost always leads to serious life problems for all involved.

As tax accountants for small businesses, we are proud indeed of our professional calling. We will help you understand the law. We will help you obey the law. And while obeying the law, we will help you keep as much of your hard-earned money in your own pocket instead of in Canberra’s as possible. Come see us and let’s help!