WITH the second half of the financial year already flying by, it's time to start thinking about your annual tax planning.
Tax planning involves three main steps:
1. Estimating your tax position for the financial year: We use your financial information for the year to date and work with you to estimate your income and expenses for the remainder of the year. We incorporate estimates of deductions, such as depreciation, to ensure your estimated tax position is as accurate as possible.
2. Exploring the tax planning options and savings available and deciding which options are best for you. We will meet with you and go through the various tax planning options available, as well as the tax savings associated with each. It is really important the options you choose make good business sense and fit with your personal goals. Sometimes the best option is to actually take no action, rather than to spend $1 to save, in a lot of cases, about 30 cents. In those cases, knowing your estimated tax position takes away the surprise element (no one likes a surprise tax bill!) and is a powerful tool for cashflow planning. You can then focus on how to grow your after-tax dollars even further.
3. Implementing your chosen options, in time. Often, tax planning options will require actions to be taken before the end of the financial year or another deadline. These could include, for example, making additional super contributions, prepaying a lease, purchasing a new piece of equipment or a vehicle or varying PAYG income tax instalments. The sooner you carry out tax planning, the more time you have to take action. We follow up with our clients prior to the end of the financial year, to make sure things are still on track - and adjust estimates if circumstances have changed.
Haley Bilston is a client manager at GTC Financial, Gladstone.
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