If you want to make the most of tax efficiencies or avoid an unexpected tax bill you might need to change the way you think about tax – Tax planning should start in July.
Business owners commonly pay more tax than they need to by leaving their tax planning until the last minute. You can legally minimise your tax obligations by starting your tax planning at the start of the financial year rather than the end.
There is a big difference between tax return preparation and tax planning, especially when it comes to tax outcomes. While tax return preparation is mandatory, tax planning is discretionary, but is absolutely necessary if you want to achieve optimal tax outcomes.
We take a ‘big picture’ approach to tax and integrate tax within your overall business strategy to achieve tax efficiencies and plan your overall tax liability more effectively.
Here are 5 proactive tax planning strategies to improve your business and personal tax outcomes.
#1: Look forwards, not backwards
Effective tax planning is about aligning your tax management to your overall business and financial goals. Just as you address your business planning at the start the financial year, it’s important to also address tax considerations for the year ahead. A multitude of tax planning strategies can be implemented in advance that consider cashflow, debt management, business structure, trusts set up, the amount of tax you currently pay as well as long-term objectives including your personal retirement goals.
#2: Trust-ed advice
If you have a trust, it’s important to capitalise on all the tax efficiencies it can offer. We can review your Trust Deed to ascertain if there are more effective ways to distribute income. We can prepare a considered trust distribution strategy to assist with your tax planning, address tax deductibility of bad debts or losses associated with certain trusts as well as make the most of franking credits for trust beneficiaries.
#3: Get your assets working for you
We can help you achieve efficiencies across your assets to help improve your tax position. Strategies such as a planned utilisation of capital gains or losses, scheduling the sale of capital gains assets for tax efficiency, refinancing or reducing non-deductible debt, can reduce your tax liability and help you achieve your financial goals more easily.
#4: Supersize your future
A little planning can make a big difference when it comes to boosting your super and making your SMSF work harder for you. Purchasing investment properties, commercial or residential, through your SMSF represents an opportunity to build your portfolio of property assets, increase your retirement savings from rental incomes and enjoy lower taxes.
There are also strategies to boost your super balance, such as the recently introduced ‘carry-forward’ rule to capitalise on unused annual concessional contribution limits, which can reduce your tax liability. You can also supersize your super by contributing larger sums of money using the ‘bring-forward’ rule.
#5: Utilise your greatest asset
You need to work closely with your accountant to achieve optimal tax outcomes. As your accountant, we have a wealth of knowledge about our clients’ businesses as well as insights accumulated from working with hundreds of other businesses over the years. One of the most important aspects of improving your tax position is the importance of meeting on a regular basis, not just at tax time. As tax experts, we can help you with proactive strategies for your business such as structuring and timing major asset purchases or funding decisions which could save you hundreds of thousands of dollars over the life of your business.
Australian tax laws are complex so it’s vital to seek specialist advice to make the most of your tax outcomes. If you would like to know more about effective tax strategies for your business, and would like to start your 2019-20 tax planning, I encourage you to give us a call on 03 9708 8801 or email info@rvpartners.com.au
At Robinson Voss Partners, we have over 40 years combined experience and expertise in specialised tax issues, accounting and business advice. We are single-minded in our goal to help clients achieve business success and personal prosperity. We have identified 15 areas where businesses can have the greatest chance of success. Find out more.
General Advice Disclaimer: The information contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Robinson Voss Partners (RV Partners) strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
