Have you ever been to a party or BBQ, and there's always someone who's rabbiting on about how little tax they pay?  Even a little scratch of the surface tells us the simple reason:  they're not making much money.

There are those who say that taxpayers benefit from their contribution to society, you know, a warm Fuzzy Feeling.  But we all remember Kerry Packer who said "… if anyone is paying more tax then they should, they want their heads read ….."   If you recall, he also said the government was wasting money.  Nothing changes!

Unfortunately though, too much focus is put on the tax, rather than on the real issues, profit, value, and return on investment.  Then tax.  Tax is a significant outlay share of your earnings, so it makes sense to manage the amount you pay.  But there are people who maximise their minimising, and perversely can even end up spending more than the tax just to save a little.

For companies, the tax rate is 28.5%, reducing to 27.5% for 2017 if the Budget is passed.  For individuals earning between $37,000 and $87,000 the tax rate is 34.5% (including Medicare), from $87,000 to $180,000 the rate is 39%.  And above that 49%, plus levies.

So, it doesn't make sense to spend a dollar to save perhaps 34%.  Spending should be about income generation – for working capital for growth or the purchase of assets that earn income and will also grow in value.

If all you want is a tax deduction, we can bill you, because accounting fees are deductible.  If you don't think that makes good sense, spending just to get a tax deduction, then don't look at a more costly outlay that won't add value.  We guarantee to deliver value in planning, ensuring clients receive more return than the small cost.

Benefits of Tax Planning

We don't advocate spending money just to reduce tax, but we are certain there are definite advantages to legitimately reducing liability to tax overpayment, and to managing the cash flow of tax obligations.  This is best done with an accountant committed to these principles, rather than a salesman using the end of financial year as a sales strategy.

What are the major benefits of tax planning, before year end?

1. There are some matters that must be completed before 30 June to ensure deductibility.  At the end of the planning year you know the likely tax obligations and the earnings achieved for the outlays.

2. It's also a good time to review current year BAS and perhaps errors made in preparation, tax debt, and other returns required by the ATO etc., (subcontractor reports, PAYG Summaries, super, workcover, payroll tax, etc.)

3. Because the tax obligations are now known for the next year, it is possible to prepare useful forecasts of profit and cash.

4. You can take advantage of government incentives, or manage any potentially negative impacts of tax and other changes.

5. It is also a good time to consider wealth creation and other matters.  This certainly includes superannuation contributions at year end, retirement planning, preparation for sale of the business, and ensuring financials are suitable for borrowing and loans.

We have found over many years that the benefits and value of planning usually exceeds the small fixed cost many times over.  So, tax planning is certainly worthwhile for you.  In fact, we will guarantee that if we don't save you tax, there will be no cost.

Please, book a short but beneficial tax planning meeting with me now.