OPINION: What is tax morality?
Morality is defined as principles concerning the distinction between right and wrong or good and bad behaviour.
We all aspire to be morally “right”. And there are those that stand on soap boxes (like this one I guess) and want to condemn the wicked and warn of fire and brimstone and that your soul will burn in the fires of hades if you continue your sinful path.
But the question of morality, in as far as taxation is concerned, leaves most people, well, either silent or verbose. I have seen men on soap boxes that condemn the souls the immoral youth only to find that their tax shenanigans are darn right criminal as opposed to just being naughty.
I have found that morality gets blurred when you are asked or rather compelled by law, to pay away a vast amount (and please, up to 45% of your income is A VAST AMOUNT) in taxation. You must really swallow hard to look beyond the payment, and I mean Hubble Space Telescope far to find the real benefits, and then you have to get your Smeagol to push the button to transfer the funds.
Every man or woman i.e. a tax payer, has the right to structure his or her affairs in such a manner as to pay the appropriate amount of tax. In the past, I have eluded to the fact that tax arbitrage is just that, planning to pay the appropriate amount of taxation.
When you are a salaried employee there is, I am afraid, no planning that can be done, other than to just plan how you spend your money.
If, however you take risks, and you are a sole proprietor, or a partner in a partnership, or a qualified professional and you are in fact conducting a trade of sorts, well then, you have to plan your taxation and the outflow of your cash in order to stay in business.
Now, this leads me to my next point. How do you consult someone to plan your cash outflows, that has nothing more than book knowledge and has not done anything more than work for a salary? Will you trust a builder to build your house if all he has is a text book understanding of how to pave bricks? Will you trust a medical specialist to perform a bypass operation if all he has is a text book understanding?
Maybe it’s time to consider the experience of your advisors? I guess there is a reason why some are described as “seasoned”, why some are described as “fresh”, some as competent. I would take seasoned any day of the week. Have you ever tasted a piece of meat that has been cooked without salt? It leaves you with a bland taste does it not…
Jade Els and Willem Oberholzer are Tax advisers for Probity Advisory.