Are you on the journey of finding the best tax planning strategies to save as much money as possible?
Well, your search ends today because we have gathered the top 5 tax planning strategies that will let you keep more money in your pocket (in the most legal way, of course).
But first, let’s have a closer look at what tax planning exactly is.
What is Tax Planning?
Tax planning, often known as tax-effective investing, is all about smartly arranging your finances to keep your tax bill as low as possible. The goal of tax planning is to help you figure out how much income tax you’ll owe for the current financial year so you can make strategic decisions before the year ends.
For most of us, income tax is one of the biggest expenses, whether you’re running a business or managing personal finances. That’s why it’s crucial to have a solid tax plan in place—it’s your key to working smarter, not harder, when it comes to your tax strategies. And with a great accountant by your side, you can find ways to save some serious cash.
But here’s a tip: always make sure you’re sticking to the guidelines and avoiding any non-compliance tactics, like tax avoidance schemes. The ATO has clear rules, and stepping outside these legitimate practices can lead to hefty penalties. This means you could end up paying back taxes with interest and facing additional fines.
Now, what are some of the tax planning strategies that can help you save money on taxes?
To Buy or Not to Buy?
Considering a new phone, car, or stylish office couch? Before you proceed with the purchase, it’s important to understand how these acquisitions can impact your tax deductions and write-offs.
If you have the funds available and are planning to invest in new equipment for your business—such as a computer or printer—consider making the purchase before June 30. To ensure you can claim it as a tax deduction, the equipment must be installed and operational by the end of the financial year.
So, plan your purchases wisely and take advantage of the tax benefits available to you.
Pre-Paying Expenses
Do you have some extra cash before June 30? Consider pre-paying certain expenses to maximise your tax benefits for the current year.
Look into expenses like rent, subscriptions, insurance, or accounting fees. By paying these by June 30, you can claim up to 12 months of prepaid expenses as deductions for the current tax year.
Superannuation Contributions
Investing in your superannuation is a smart move for your future. By making additional or larger contributions, you can not only boost your retirement savings but also claim an extra expense to reduce your tax bill.
Just remember, to have these contributions deductible for the current tax year, the payments must be received by your super fund before June 30.
Business Restructuring
Are you seeing significant growth in your business as a partnership or sole trader? It might be worth considering a transition to a company structure to take advantage of potential tax benefits.
Each business situation is unique, so it’s essential to evaluate whether a new structure is right for you. If you’re unsure about the best option, consult with your accountant or get in touch with us. We can help you determine if restructuring could provide the tax advantages your business needs.
A tax planning meeting with an expert
Booking a meeting with an expert is an underrated but the most effective strategy when it comes to tax planning.
Just thinking about it, who else can tell you better about tax saving tops than a tax accountant who has spent countless hours learning about those?
This meeting can help you improve cash flow, and decision-making and help you gain more control over your finances. You have unique goals that need unique strategies, and an experienced tax accountant can help you achieve exactly that.
So, if you haven’t already, book a meeting with your accountant today. And, in case, you are on the hunt to find the right accountant, give us a call. We’d be happy to analyse your situation and develop perfect strategies to make sure you are not paying a single penny more than you need to in taxes.
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