WHAT DO YOU MEAN I HAVE A LARGE TAX BILL?
No one likes a nasty surprise and having an unexpected tax bill would fall into this category. This nasty surprise is magnified when there are insufficient funds to pay the tax bill.
So, how do we avoid this nasty surprise?
The answer is Tax planning. Tax planning is a process that can eliminate this surprise and potentially allow you to take action to reduce this tax bill and increase your overall net worth.
The key thing with tax planning is, however, that you need to be doing it way before the end of the financial year.
Why Undertake Tax Planning?
1. Save Tax
This is the main benefit. Once the end of the financial year is finished on the 30th of June little can be done for the tax position.
2. Create Wealth
This is done by implementing strategies to reduce the amount of tax you pay. If this is strategy includes superannuation, then the increase in your wealth position can be significant.
3. Take Advantage Of Any Recent Tax Changes
Each year there are several law changes and your accountant will be aware of these and apply them where possible.
4. Examine The Performance Of Your Business For The Year
The sooner the performance of a business is communicated with the business owner the sooner changes can be made. If the business has planned for a profit number of $100k this can be compared to the actual performance and action can be taken.
When Should Tax Planning Occur?
Tax Planning should occur after the March BAS has been completed. This would usually happen sometime in mid to late April.
What Is The Process?
This is where the accountant estimates your tax position based on your current financial figures. If you have prepared your March BAS, then the accountant will look at the numbers to determine what the profit is at March and then pro-rata the June quarter’s income to arrive at a profit number. The accountant will then look at making any adjustments to that profit number as well as considering any personal information such as rental properties etc. to determine the final tax number.
Once the tax numbers have been determined, the accountant (where applicable) will look at presenting some options to reduce that tax number.
Tax planning is equally as important to individuals/investment entities who may have had a major event during the year.
How Long Does It Take?
3-7 hours to determine the tax position. Then another hour to go through these tax numbers with you as well the options available.
What do I have to do through it all?
- Provide the information we need to determine the tax position. We would provide a checklist of the information that we need.
- Answer any questions that might be asked during the process.
- Listen at the meeting where the tax numbers are communicated and if you intend on taking action, make sure that this happens well before the end of June.
What Options Are Available?
- Prepay some of your upcoming expenses in the current year
- Taking advantage of any legislative changes such as the instant asset write off
- Taking advantage of the business owners and family members superannuation caps
- Pay employees accrued superannuation
- Write off bad debts
- Postpone invoicing
“We had the sale of a couple of rental properties during a financial year and we knew we were going to have a large capital gain. With discussions with Cox Sherlock Accountants and our financial planner we were able to structure our affairs in a way which both saved tax and gave us peace of mind as the tax bill was in line with what had been calculated by Cox Sherlock.”
– Shelley, U
Do you want to avoid tax surprises this year?
Contact us today to have a no-obligation discussion about how tax planning can help you.
Individual Income Tax
Preparation of individual Income Tax Returns for wage and salary earners and provision of taxation advice.
Investor Income Tax Returns
Income Tax Returns for rental property owners and larger investors and provision of taxation advice.
Business Financial Statements
Preparation of simple Financial Statements and Income Tax Returns for individual contractors and micro businesses and provision of taxation and commercial advice;
Business Income Tax Returns
Preparation of Financial Statements and preparation of Income Tax Returns for small to medium sized businesses including individuals, partnerships, companies, and Trusts together with provision of taxation and higher level commercial advice.
Business reports involving comparisons with Industry Benchmarks, and analysis of the client's business and comparisons with the Industry Benchmark.
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