How to make your mining income go further?
Within the mining, oil, and gas sector, the allure of substantial financial rewards is undeniable. However, this large income often brings with it a formidable challenge in the form of significant tax obligations. The industry's unique dynamics restrict the range of expenses that miners can claim, leading to a heavy tax burden that proves challenging to mitigate. Despite the availability of certain deductions such as superannuation contributions, income protection premiums, and industry memberships, there isn’t a great deal of other tax deductions.
This substantial tax load frequently steers miners away from diversifying their investments beyond their family home and superannuation accounts. Their reluctance stems from the reality that half of the income and gains generated from these additional investments are redirected toward tax payments. However, amidst this tax landscape, a valuable financial tool emerges in the form of a family trust.
In many mining households, the miner often stands as the primary earner for their family. Herein lies the potential benefit of a family trust—it serves as a mechanism to redirect income and gains derived from assets to a spouse. Typically, the spouse may have a lower income bracket or might not be actively engaged in employment. Although this strategy may not directly offset the immediate income earned, it presents an effective means to distribute income across two individuals rather than consolidating it under one. This
redistribution could potentially result in a more favourable tax arrangement, given the variance in tax brackets between the primary earner and their spouse.
Effectively, a family trust acts as a conduit to spread income and gains, allowing for more strategic tax planning and optimization. By utilizing this structure, miners can potentially alleviate some of the tax burden associated with their substantial income. Obviously, using a family trust as a vehicle being tax planning arrangements is on that can be quite complex, so it’s always recommended to speak with a professional prior to making a decision. Should you have any further questions on how a family trust can help you, please don’t hesitate to contact us.
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