Not sure on the best setup for me before I approach a professional

[getmeout]

Hello everyone, nice to meet you all. I have been reading here for a while and absorbing information that many of you have posted, I cannot thank you all enough for sharing this info.

As the title suggests I am looking to take the leap into the world of offshoring but after reading a number of the threads on here I can respect there are a lot of pitfalls and you get what you pay for. I can also see that me having at least a basic understanding of what I need to do before I approach a professional will save me time and headache. I'm hoping by asking my questions directly you guys may be able to point me in the right direction.

My situation is not overly complex as opposed to some of the setups I have read about on here, but as a newcomer to offshoring it feels very daunting.

I live in Australia, a country which appears to be going down a trend of wanting to steal as much wealth as possible from productive people via a series of stealth taxes and a population which loves the idea of this. I don't want to get too political but I'm sure lots of you here can appreciate what I mean by this. I have serious concerns as to my future in this country because it seems the rules are constantly changing and only getting worse. I make 100% of my money legally and very on the books via investing in shares/speculating and so I am not concerned too much about banks questioning me as to the origin of my money. Despite my money being legally earned in a very obvious way, I am very uncomfortable that the government might begin to try to steal it at the behest of the population. I know it's not "that" bad just yet but I can see all the warning signs which indicate to me I need to act now.

This means wealth protection is my primary goal, not tax minimization. Of course, minimizing tax legally would be a bonus and at the rate I earn money would likely pay for the accountants and lawyers in tax savings.
I earn about 150k AUD a year in dividend income + anywhere from 50-500k a year in capital gains (it varies wildly as I do a lot of speculating). Australia has a capital gains tax discount, but I am not always able to use this. Average tax rate can be 45%. Sometimes lower if I can utilize the capital gains tax discount.

I have been looking at overseas companies to do my share investing and legally reduce my tax moving forward. I don't mind paying a reasonable rate of corporate tax in exchange for a country with strong rule of law that basically won't steal my money. I also want a place that won't suddenly decide to change the rules to an egregious degree based on short sighted politics, like Australia seems to frequently do : Singapore for example, or Dubai. After reading all your posts here it seems that places like these also get treated better by banks and brokers which would be important since I'll need to be actively trading various international markets to make my income.

I am thinking of then having the company owned by an offshore trust which I can give control of to trusted family members. This is where it gets really confusing for me because I don't want to mess it up and have this impact the business operations. For example a broker or government getting upset at this arrangement and limiting my ability to do business.
St kitts and nevis or the cook islands come to mind after reading many posts here.

I understand this sort of thing is not easy to do, but for my personal situation the peace of mind knowing my assets are out of the reach of parasites, for lack of a better word. An additional concern I have which I presume matches up to this is that I'm a younger man and seeing a few women. I don't know if you guys are aware but there are some nightmarish legal rules which make my assets vulnerable to these women, even if I am not married to them or have a child with them. The laws are written in a vague manner which means you just need to get unlucky with a judge. Because I use my assets to generate my income, protecting them is critical to my livelihood. I have worked hard for years and don't want to live in fear and be unable to live my life because I am worried about gold diggers or the government sending me bankrupt in an instant. I look at what the west did to russians who had nothing to do with politics and it just makes me think if they can do it to them, they can do it to me. There is even an ongoing court case right now with one of Australia's billionaires who had the laws changed on him.

You guys are the experts and I know many of you have done this for years and will know far better than me, does this setup sound like it would work with my lifestyle? I am not adverse to moving out of Australia, however I would like to retain a property here for visiting family and coming back for holidays. Preferably not in my name for the above reasons. However Australia has some weird laws which if I'm reading them right can mean I'll still be considered a tax resident and subject to their BS. For example if I am employed by the holding company and making trades on it's behalf while physically in Australia (even if I'm just back on holiday and doing a bit of work). I understand you guys can't give me exact legal advice but the more help you could give me in a general sense would be eternally appreciated. I just want to know if I'm on the right track or if anyone knows a better solution for my situation that would primarily protect me first and then minimize tax as a secondary benefit.

Thank you all

 

[Sols]

This is a lot to take in and you've honestly done much of the research‌ one can do before engaging a professional. You have correctly identified that asset protection is‍ separate from tax reduction, and you seem aware of the pitfalls of tax residence.

Something to keep mind if you place assets in a trust is that you surrender day⁠ to day control of them. This is by design. Otherwise, the trust is at risk⁤ of being disregarded.

There was a recent thread you might find interesting: Cook Islands Trust⁣ for asset protection, Does it Work??

I'd say you're at a point where the next⁢ steps are going to be so detailed that you'd be better off speaking with a︀ professional who has a detailed view of your full situation. Most likely, you'll need a︁ lawyer in Australia to help with your domestic affairs and a lawyer in your chosen︂ location of future residence. A third service provider may be required if you want to︃ set up a trust in some place that's neither Austrlia nor your new place of︄ residence.

If you plan to relocate but want to be close to Australia, you have︅ a lot of attractive options like Singapore, Thailand, and Bali/Indonesia. Depends on what kind of︆ lifestyle you want.

Here, it sounds︍ like you might be seeking to have your cake and eat it, too. If you︎ can think of a loophole, chances are AUSTRAC and ATO have as well.

You can️ give a villa to a family member (make sure they genuinely use it) and come‌ visit Australia as a tourist. That much is fine. But when you're doing work for‍ an Australian company, there's a risk ATO thinks you haven't severed ties to Australia and⁠ remain tax resident.

You can do some tests on the ATO website. They aren't legally⁤ binding but will give you an idea.
https://www.ato.gov.au/Calculators-and-tools/Work-out-your-tax-residency/

 

[getmeout]

Thank you for your help. My concern is the determination for︎ what counts as tax residency can be so vague and open ended. Ideally a certificate️ from the tax authority in whatever country I choose to reside in should in all‌ fairness be enough proof that I am not a tax resident of Australia. I don't‍ intend to do the dodgy people do where they are resident somewhere else but don't⁠ actually live there, but I would like to be able to go back and visit⁤ family for a few weeks without arbitrarily being deemed that I am somehow a tax⁣ resident in Aus as a result of that.

Either way my biggest concern is the⁢ asset protection and this is why I don't want to own anything because if I︀ own nothing I cannot be sued for it, or have a gold digger try to︁ take it. I was hoping to be employed by a company (which holds investments) and︂ my job is to trade those investments on behalf of the owner (which would be︃ a trust owned by my trusted family member). Does this sound reasonable at a basic︄ level? My concern with this is related to this insane law.

Guidance from the Australian︅ Taxation Office (ATO) has indicated that if a foreign incorporated company carries on a business︆ and has its central management and control in Australia, it will carry on business in︇ Australia with the meaning of the CM&C test of residency, even though no part of︈ the actual trading or investment operations of the business take places in Australia

I have︉ been researching this for days and it seems so vague that it's almost like it's︊ up to the person I get at the tax office to decide what the status︋ of the company actually is. It seems crazy that a company owned by a cook︌ islands trust, which operates out of Dubai but has an Australian citizen CEO who comes︍ back for a 2 week holiday and suddenly if someone decides they can deem it︎ to be whatever they want. This is my biggest concern with Australia and what makes️ me extremely on edge because I don't have a problem with fairly defined rules yet‌ the more I dig into tax matters in Australia (not to mention other things such‍ as courts having the ability to crack open domestic trusts like they're nothing) it just⁠ seems vague and left up to someone's discretion. This does not seem morally right and⁤ leaves me wondering where can I go where the law will be respected properly.

Is there some other mechanism with offshoring apart from a trust that would enable me to⁣ have asset protection while remaining in control of the trading (so I can continue to⁢ make money) that I'm just unaware of? My concern with just doing a company and︀ having myself be CEO and shareholder would be that I could potentially have my shares︁ taken off me in court.

It feels so weird writing this post because I have︂ not earned my money in any illegitimate way, nor am I trying to break any︃ laws. I just want to be left alone to enjoy what I worked hard for︄ without having it unfairly stolen from me by some faceless bureaucrat.

Thank you so much︅ for your help guys. If anyone knows the name of professionals in Australia who deal︆ with this I would also appreciate that. Normal accountants here have no idea or think︇ you're suspicious for such a thing. There is a very toxic culture of "why would︈ you ever want to leave Australia" here.

 

[getmeout]

My concern is number 2. Say a Dubai company is owned by a cook︂ islands trust which is being administered by my family member (who is an Australian tax︃ resident). I live completely overseas and don't do any business in Australia. The company pays︄ it's tax in Dubai or wherever it's incorporated.

It seems open ended enough that either︅ me taking a holiday back home, or the ultimate beneficial owner of my family member︆ who is handling the trust could somehow have some bureaucrat decide to classify it as︇ an Australian taxable company. I should add that the only possible economic tie this company︈ would have to Australia in terms of doing business would be investing in ASX listed︉ shares (alongside shares on other exchanges across the world). No offices in Australia, no permanent︊ staff).

Also if anyone knows how much I should expect to pay to a professional︋ for setup and ongoing costs as a rough estimate so I don't get ripped off︌ it would be amazing. I'm completely new to this and just trying to learn. I︍ understand doing it cheap is not a good idea and have read a fair few︎ threads around here to that effect.

 

[JohnnyDoe]

All those beautiful little Pacific islands are so close to you. Pack your stuff and leave, it's simpler than you think.

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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields​

 

[getmeout]

I agree, after reading the "rules" it‌ seems like proof of that is not enough. A quick look through the ATO's website‍ shows a number of vague loopholes they can use to claim you are a tax⁠ resident when you're actually not. But in an ideal world it would be. It's almost⁤ like I have to prove my innocence, instead of the other way around.

I don't⁣ want to be too negative though, I think most people here agree the situation in⁢ a fair few western countries is getting more and more socialist and rules are getting︀ more and more insane. I'm trying to find practical solutions so I can enjoy my︁ life 😀

Believe me, I︃ want to do this. I've been reading here and I can see a fair few︄ people make the mistake of cheaping out or rushing and doing things incorrectly though which︅ leads to further problems.

I'm far more concerned with having airtight asset protection than minimizing︆ tax though. That's just a bonus for me if I can achieve that.

 

[JohnnyDoe]

getmeout said:
I'm far more concerned with having airtight asset protection than minimizing tax though. That's just a bonus for me if I can achieve that.
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asset protection in essence means putting assets out of reach. Your physical persona is an asset and must be part of such plan. Most often that's the weakest part of the plan.

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[getmeout]

I know what you mean, this is what⁠ attracted me to the idea of the cook islands trust and their duress clauses. I'm⁤ only earning money through share trading which is fully audited so there's zero concern on⁣ my part about me being in one of those cases like I've read about where⁢ people do criminal stuff.

I am more worried about them changing rules retroactively as the︀ country goes increasingly broke due to negligent policy and trying to appropriate wealth in whatever︁ manner they can. This was why I was attracted to the idea of an overseas︂ corporation doing my share trading, since it's domiciled physically outside of the country and from︃ a legal perspective I would have a high enough degree of safety relative to the︄ level they would go after wealth re-appropriation. They obviously put resources into going after people︅ even overseas, but those people have committed a crime of some sort or are evading︆ tax. Since I'm doing neither and in the grand scheme of things I'm a relatively︇ small fish I am hoping this sort of setup would be enough to protect me?︈

It would also offer superior protection against gold diggers since in Australia a domestic trust︉ or prenup is completely worthless if a judge decides they want to "be fair". From︊ what I understand it's just not feasible to go overseas and argue this in front︋ of a cook islands court. It would cost more in lawyers fees alone as I︌ understand it. And with the duress clause I have no control over what the trust︍ does, so hypothetically what can they do from a legal perspective? I do hear people︎ say they'll imprison you, but is this not a human rights violation since you have️ no practical way to comply with their judgement? Also, every case I have heard about‌ that occurring has been someone who committed a crime of some sort. Not a person‍ who just wants to protect what they worked for.

If I'm misunderstanding any of this⁠ and have it wrong please let me know. I just want to make sure when⁤ I do speak to a professional I can correctly explain my circumstances and what I⁣ would like to do.

 

[JohnnyDoe]

getmeout said:
I know what you mean, this is what attracted me to the idea of the cook islands trust and their duress clauses. I'm only earning money through share trading which is fully audited so there's zero concern on my part about me being in one of those cases like I've read about where people do criminal stuff.
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You must prepare for the imponderable.

getmeout said:
I am more worried about them changing rules retroactively as the country goes increasingly broke due to negligent policy and trying to appropriate wealth in whatever manner they can.
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I share this worry of yours, which is why I prefer Nevis.

getmeout said:
This was why I was attracted to the idea of an overseas corporation doing my share trading, since it's domiciled physically outside of the country and from a legal perspective I would have a high enough degree of safety relative to the level they would go after wealth re-appropriation. They obviously put resources into going after people even overseas, but those people have committed a crime of some sort or are evading tax. Since I'm doing neither and in the grand scheme of things I'm a relatively small fish I am hoping this sort of setup would be enough to protect me?
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A company alone could actually put you into bigger troubles.

getmeout said:
I do hear people say they'll imprison you, but is this not a human rights violation since you have no practical way to comply with their judgement?
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Human rights? Still believe in fairytales?

getmeout said:
Also, every case I have heard about that occurring has been someone who committed a crime of some sort. Not a person who just wants to protect what they worked for.
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That's what you have heard, not necessarily the reality. Truth is what you can prove in court, and justice is not of this world.

getmeout said:
I just want to make sure when I do speak to a professional I can correctly explain my circumstances and what I would like to do.
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find a professional who is not just a seller of whatever is most profitable for him.

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[getmeout]

Thanks for your replies, is there something about Nevis that's better⁢ than cook islands?

I suppose you're right re human rights by the way, I'm just︀ trying to remain optimistic. I don't like the way the world's going but I also︁ don't want to just be one of those people who complains about it and does︂ not do anything to improve their personal circumstances at the very least. There's the additional︃ worry of the multi-polar world we're headed towards making people criminals just by association if︄ they want to remain neutral and not have any part in this growing divide between︅ east and west. For example people now seem to think holding rubles = you're on︆ russia's side instead of just doing some currency hedging (not really saying rubles are a︇ good investment here just speaking to the cultural issue).

Should I start by speaking to︈ a lawyer or an accountant? The issue is in Australia normal accountants think of my︉ problems as something of a social taboo, while I'm sure specialized ones exist that deal︊ with this every day I'm only slightly wealthy and not in the 100's of millions︋ range and not sure exactly what I should be looking at to qualify them as︌ a good and trustworthy one. Last thing I want is to get scammed during the︍ process.

 

[Don]

One mechanism that I⁣ can think of is using an Estonian non-profit association.

• Non-profit associations can hold shares in⁢ companies and operate similarly to regular Estonian companies with 0% corporate tax, so such entities︀ can also serve as holding structures.
  
• Non-profit associations can not distribute dividends.
  
• The non-profit association︁ does not have owners but members. Membership in a non-profit organization and the exercise of︂ membership rights cannot be transferred or bequeathed.
  
• You would need to move the assets to︃ such entity as a donation.
  
• You can remain in control of it if you control︄ all the members of the association (the members can be for example, you and your︅ company or your companies).
  
• The law says that the director can be declared as the︆ UBO for non-profits, so someone else can fulfil this role for you to remain in︇ privacy.
  
• With the correct legal structure, it is impossible for bailiffs to access these assets.︈ At the same time, you can dissolve the entity at any time to get the︉ assets back in your name.
  

 

[getmeout]

Interesting idea, would this fall under the provision below though if the UBO and director was︅ my family member (who is an aus tax resident)? If it can't distribute dividends though︆ then would I be correct to assume it can't pay me an income though? Or︇ could it do so via employing me (and then I live in a favorable jurisdiction︈ for personal tax).

One more issue could be the geopolitical situation with Russia, but I︉ don't know how likely this actually is. As @JohnnyDoe said above though it is worth︊ considering all possibilities. Very interesting idea though and one I have not come across yet.︋

 

[Don]

Management and control in Australia potentially expose any structure︁ for tax risk in Australia.

Something happening to Estonia would mean the breakdown of NATO.︂ Having new joiners Sweden and Finland (neighbours to Estonia) in NATO has arguably improved the︃ feeling of safety. Anyway, I guess it's best not to put all the eggs in︄ one basket. You can also obtain a residence permit in Russia based on investment to︅ change sides if need be.

You can still pay out your salary, and if you︆ remain non-resident outside of Estonia, the salary will not be taxed in Estonia.

The second︇ option for profit distribution is dividing the non-profit into two non-profits and then liquidating the︈ newly formed entity for cash-out in order not to disrupt your main legal structure.

 

[getmeout]

As a︂ short term solution while I find the place that suits me best for personal tax︃ jurisdiction, would this work in theory from an asset protection perspective?

Cook islands or nevis︄ trust which controls an overseas corporation (either the one you described or a singapore/dubai one.︅ Or several of them for further safety?). That overseas corporation does it's investing activities, with︆ me as an employee. I cop the Australian tax but the assets are shielded since︇ they are:

1. Not owned by me since the trust owns the corporation and I︈ am only an employee
2. Not geographically located in Australia other than the ASX shares︉ so there is no physical control over the assets, meaning they would need to apply︊ to singapore/dubai/estonia who would then tell them the external trust owns everything.
3. Since none︋ of the money was earned through illegal means the overseas jurisdictions would also laugh at︌ such a request

Surely under these circumstances it would be extremely illegal and a breach︍ of rule of law to violate this structure and seize the Aussie assets. And since︎ I have not done anything illegal and as far as I can tell nothing about️ this setup is illegal and all tax is being paid, there's nothing I can really‌ do even in the case of an insane attempt to steal the assets. This would‍ be in a hypothetical scenario where for example a gold digger manages to convince a⁠ judge to give her assets that are not hers. Or if the government introduces BS⁤ new taxes, I can then quickly relocate and the following would apply:

And then when⁣ I finally want to leave Australia all I have to do is notify the ATO⁢ that I have changed my tax residency + get my family member who runs the︀ trust a house in the new jurisdiction and help them move there as well. Now︁ no-one involved with the company is an Australian tax resident by any metric. And I︂ begin paying corporate tax only in the setup jurisdiction. And prior to this my accountant︃ would deal with the dual taxation treaties ect...

Does this sound realistic for a degree︄ of protection in the short term before I fully move out and the only downside︅ would be me paying a high tax rate?

 

[Sols]

If you genuinely sever your ties︁ to Australia and establish yourself and your company as bonafide tax resident somewhere else, your︂ risk being deemed tax resident in Australia is low.

Maybe not a huge consolation, but nothing ATO has indicated here︍ is particularly unusual or outrageous. The rules in Australia are in line with its peers.︎ What sets Australia a bit above the average is the ruthless efficiency of AUSTRAC and️ ATO together. I.e., in some places you can rely on non-enforcement quite predictably. In Australia,‌ not so much.

The laws and regulations are written︆ vaguely so that they aren't easy to get around. If you people a clear cut︇ path to compliance, you also give malicious actors a blueprint how to get around the︈ regulations.

There are a︍ lot of different arrangements besides just trusts. Foundations, Anstalt, Stiftung, and variations thereof.

This is very hard to estimate. An⁤ asset protection structure can cost anywhere from a flight ticket and accommodation wherever you feel⁣ safe, to tens or hundreds of thousands (in set up and annual upkeep) depending what⁢ structure you end up with. Or maybe just a few thousand for a simple Cook︀ Islands LLC, plus relocation to Singapore.

 

[getmeout]

Thanks for the help, your︇ post is fantastic. What do you think of the scenario I outlined in the post︈ above? Does that seem realistic as a short term solution?

My concern regarding that rule︉ would be if I was to ever take a holiday back to Australia. If my︊ entire life is situated overseas and I happen to come back home for 2 weeks︋ and do some work while I'm here, it's so vague that theoretically some bureaucrat could︌ claim it should be taxed in Australia. I know practically that would likely not happen︍ but it makes me very uncomfortable when rules are not clear. How can a person︎ follow the rules if they are not made crystal clear?

I'm not worried about AUSTRAC️ or anything like that since the source of my funds is so obviously legal, I‌ want to do this by the book and set myself up legally so I can‍ live my life with peace of mind. Thanks again for helping answer my questions!