Let’s be frank, paying more tax than you need to will never make anyone happy.
The happiest business owners begin their tax planning in July… at the very beginning of the financial year. However, if that ship has sailed, your next best opportunity is now, at the end of April. With two months left until the end of financial year, you still have time to implement tax-effective actions that can significantly improve your tax outcomes.
A common misunderstanding by business owners is that your tax bill is solely reliant upon your tax return preparation.
While careful tax return preparation is important, the fact is, most tax saving mechanisms need to be implemented before 30 June. The earlier we identify the issues, the more time you have to explore the options, arrange your cashflow and implement a plan to reduce or avoid the need to pay unnecessary tax.
Armed with your financial reports from July to March, we can estimate your income and expenditures to calculate your expected tax obligation for the whole financial year. And that’s when the questions begin!
Our far-reaching questions will provide answers for reducing your tax bill, deferring tax to ease cashflow and making the most of deductions and concessions available to you.
For example, you may have been planning to buy vehicles or equipment or make other capital expenditures early in the new financial year. It may be prudent, however, to bring those purchases forward to the current financial year.
Similarly, we might ask about debtors, bad debts and inventory valuation methods. These may allow you to defer income, accelerate deductions or vice versa. The current changes relating to company tax rates and turnover tests provide us with many planning opportunities.
Then, of course, we’ll check your superannuation contributions. Superannuation has a favourable tax rate and it may be beneficial for you to top up your super account.
Most importantly, for those of you who utilise a trust in your structure, a carefully considered trust distribution strategy is vitally important to achieve the best tax outcome.
The fact is, there’s a myriad of tax planning measures with short term and long term tax-effective outcomes available to you. My best advice is for you to begin your tax and business planning at the beginning of the financial year and to review it in the fourth quarter.
Leave it too late, and you simply won’t have the time you need to implement tax-effective actions, and you will very likely, pay more tax than you actually need to. While we all must meet our tax obligations, this doesn’t mean we have to pay more tax than necessary, disrupt cashflow, forfeit important goals or impede the smooth operation of business.
At P+Y, tax planning is among our key advisory services.
Tax planning is an overarching service that includes advice for tax-efficient structures, ownership and holding assets. With these and other tax planning and structuring matters carefully considered, you’ll be well positioned when tax return preparation time comes around, happy in the knowledge that you’ve only paid the tax you should – no more, no less.
P+Y Accountants and Business Advisors are known for expanding the possibilities for professionals and enterprising business owners.
The information contained here is general and not intended to serve as advice. Any information supplied is not a substitute for independent professional advice. We do not warrant the accuracy, reliability, completeness or adequacy of the information or material. All information is subject to change without notice. P+Y and each party providing material displayed here disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. Users are encouraged to contact P+Y for advice concerning specific matters before making any decision