Tax planning is the art of effectively using available strategies to either minimise or defer taxes. The aim is simple: legally keep as much of your hard earned money as you can.
How do you do this?
Firstly contact an expert. Tax law and its interpretation is in a state of constant change. The ATO have more sophisticated data matching techniques than ever before and they are becoming more successful at issuing assessments based on industry benchmarks.
- Make sure you are structured correctly to take advantage of the various tax rates for different entities – if not accept advice to properly prepare for the following year
- Forecast your likely profit to 30 June
- How can we reduce, defer or allocate this profit figure to our legal advantage? Consider super contributions, income deferral, prepayment of expenditure, bad debt write offs, legally splitting income, depreciation write offs and trading stock management
- On the other hand we need to look out for: adequate cash flow, debit loan accounts, illegal income splitting (ie personal services income), how much we can prepay, finalising distribution minutes prior to year end and operating within the ATO industry benchmarks
- Portfolio management and knowledge of the cost base of your investments
- Reconfiguring portfolio to maximise CGT position (secondary to portfolio selection)
- Liquidity including meeting minimum pension payments
- Staying within the contribution caps
- Conditions of release – accumulation versus pension
Individuals – including High Net Worth Individuals:
- Prepayment of expenditure – interest on investment loans for say shares and property
- Insurance portfolio analysis
- CGT management – deferring gains, bringing forward losses
- Salary packaging and whether it will work for you
Taxes are often the single greatest expense we will have in our lifetime.
Avoid potential mistakes that could cost you significant amounts of money.
PAG Accounting are tax-planning professionals with a wealth of knowledge and experience in tax planning, business structuring and financial planning.