So. I am now 45. You cannot really argue that 45 is “early 40’s”. Especially as an accountant. It gets you thinking. My career is pretty much going to go in the same pathway from here on in. I am not going to make some massive change and become the CEO of Westpac or Tesla. The recruitment agents who called before will now look to younger accountants and advisors to be poached across to the big accounting firms. My wife and family are set from now on and I will (hopefully) die with my wife and family around me.
However the opportunities are closing and my body is shutting down. I know my career is set. I know the school my kids go to. I cannot run as fast even if I did exercise. I do not get the same attention from attractive young people of the opposite sex (I never did in all honesty).
45 is a great time for a mid-life crisis. A time for a self-indulgent self-reflection and a last hurrah for my youth.
If you can arrange for that mid-life crisis to become tax deductible all the better. The tax deductions can potentially cover nearly half the cost.
Maybe you can use your business accountant as a way to convince your spouse that your mid-life crisis is a tax effective strategy to further your career aspirations as a family.
You know the saying. How to get a million dollars is to start with 2 million and buy a vineyard. You can also insert the modern day equivalent of a brewery or distillery into that hilarious accountant joke.
The money spent in holding onto, promoting or advertising your newly acquired vineyard is tax deductible. Likewise there are generous tax deductions available for capital infrastructure spent on improving the vineyard.
Go tax deductions!
These tax deductions can work well for those running a bona fide vineyard. And yes there are some pesky tax laws that stop you offsetting your salary income by the bottomless pit of tax deductions – but you can overcome these relatively easily if the commercial land your vineyard is on is worth more than $500,000.
Some people would like the idea of becoming famous. And at 45 the chance of cracking Hollywood when I have never done an acting class might be low. However if you want to become a thought leader in your field you can simply pay a bonza in advertising moolah and plaster your face all over the world. Think what CPA did with Alex Malley.
Eventually somebody will start to listen to what you say (you just keep on paying the agencies to repeat the message) and you will start to become recognised. This was the type of strategy that Donald Trump employed in the early days – any publicity was good publicity.
The costs spent on establishing your media presence will be tax deductible. The media profile will need to be connected to your business to enjoy the tax deductions but most people would do that anyway.
So if I was a … business accountant in Perth I would promote myself as a keynote speaker business advisor type of person. That would be tax deductible to my business.
If I was trying to establish a media profile as an AFL authority will not really work for the purposes of getting some more tax deductions.
It is an interesting aspect of tax law that motor vehicles are subject to a horrible amount of tax legislation. It seems that the guys in Canberra are particularly jealous of family business owners getting a better quality mid-life crisis than they achieve through the tax system.
Anyway. A motor cycle is not a car. The tax law relating to motor vehicles does not apply to motor cycles. In particular the fringe benefits tax law does not require you to keep a log book when your employer salary sacrifices the Harley Davidson to you.
All that is required is that you pay to your employer the palty sum of 16 cents for each kilometre you actually use riding the motor bike for personal gain.
Given that most mid-life crisis victim will slap down around $20k plus on such a cool looking piece of two wheel machinery and then only drive it for 20km before realising the school fete is on means that your employer will have a paltry $3.20 in income against tax deductions of $20k to have the motor bike sitting in your family room the next 6 years.
My memory of university is very different to what I see on TV. I mostly remember abject poverty, sitting in the library frantically writing assignments that I should have started earlier, mechanical problems with my 68 Torana, exhaustion and trying to have an awesome party with a $9 bar tab.
It all looks different nowadays according to the TV. These young people at university are stunning, have lots of money, spend a fortune on clothes and chat all day about how mature old people are.
If you undertook a Masters Degree in your chosen field: the cost of the Masters program would become tax deductible. You do not need to pass. Just enrol, walk around and hope that the knowledge will somehow get into your head. Further, if you took a 6 months sabbatical to further your career the drop in your income would put you into lower tax bracket.
A lot of these higher education programs are becoming quite expensive – with the most expensive MBA’s in Australia coming in at $85k.
Sadly the Tax Office are starting to investigate some of these MBA programs. To enjoy a tax deduction for your MBA program the costs have to be directly related to their current income earning job. So if say, an electrical engineer in a technical career did a MBA with units covering capital raising legislation – the unit would not be directly related and not tax deductible.
It is extremely expensive to become a professional athlete. You have to spend a fortune in airfares, sports coaches, sports scientists, medical people and a range of complicated technical equipment. If you wanted to add in something like a maxi-yacht or a stable of horses the costs will jump exponentially.
If you became a professional athlete all of these costs will become tax deductible.
Sadly the tax law contains a provision commonly referred to as “non commercial losses” which will probably require you to earn $20,000 a year in prize winnings or sponsorship. However if you can overcome that slight problem you can claim all of the other stuff as a tax deduction.
Travel for business purposes will become tax deductible.
So if you need to travel for business to say, Machu Picchu, for a business trip the government will give you a tax deduction. That tax benefit cover from 20% to 47% of the cost of the trip as a juicy tax refund.
Sadly the trip will need be connected (in one way or another) to how you currently earn income. So in the case of Machu Picchu you are required to prove your connection to your current business income and the tax deductions.
So if you own an adventure wear clothing range it would make sense you go to a rugged climate. However it might be harder that if you were say, a Perth Business Accountant.
Sadly the tax law does not really help people with a mid-life crisis. No matter how much you spend on a car the tax deductions via depreciation are capped at around $57k for most cars.
However the high running costs you have to pay for you supercar, like tyres and replacing the broken hood ornament are fully tax deductible. This can significantly reduce the cost of owning these cars.
You also have to keep a log book for your car use. This will also drop your tax deductions.
If you do a finance lease on a car you can probably claim more GST on your new car over time that what you would be able to enjoy by paying cash or a hire purchase contract.
Our light-heated approach here is simply to show you some ways you can have a bit of fun with the tax system. Hopefully we do not see anybody actually suffer from the conflicts of a mid-life crisis. There is no winner in that.
However, if you are wanting a skilled business consultant to go over your family business tax affair’s with a critical eye – come and have a chat.