Pay less tax, more attention
IT'S early autumn, the birds are singing, the skies are blue, and the mornings are getting cooler.
Naturally, at this time of year, everyone starts to think about tax planning.
Seriously though, now is an ideal time to start working towards a plan for minimising your 2012 income tax liability and taking steps to ensure that you can pay whatever is necessary.
One of our national pastimes is avoiding the imposition of income tax - so it surprises me that most people just let their tax affairs ride until it is too late to do something about it.
Unless your financial affairs are very simple (e.g. you're unemployed), tax planning could help reduce your tax payable in one way or another.
Although the ever-expanding tax legislation has been designed to close a number of loopholes, and the Treasurer is threatening further draconian action, there are still perfectly legitimate methods of reducing your taxable income - indeed it is your patriotic duty to do so!
The important point to remember is: however good your accountant may be, post-June 30 the range of helpful options will shrink significantly.
Depending on your circumstances, options such as prepayment of interest on investment loans, additional superannuation contributions and even restructuring of your business operations can achieve major savings.
As indicated above, the other side of tax planning is to make sure you can pay any tax if or when you are required to do so. Knowing in advance what the end result is expected to be allows you to make the necessary arrangements to accumulate sufficient cash. (The ATO don't take credit cards!)
Your accountant should be able to provide you with a comprehensive analysis of your income position for the financial year and make some recommendations in time to allow you to take the necessary action. If you are in business, the completion of your March BAS is usually an appropriate trigger point.
Of course, you need to do a cost-benefit analysis on your tax planning - if the cost of obtaining the advice is out of proportion to the tax savings.
We can determine if you would benefit from a tax planning review with just a quick phone call.
The peace of mind that comes from knowing that you are not paying a cent more than you have to and having a reasonable estimate of the end result removes some of the stress from the end-of-financial-year excitement.