Tax Planning is Here to Stay
Around this time of year, we at SP Solutions find ourselves reminding our current and prospective clients just how important it is to conduct tax planning.
It is a necessity! It is crucial for a business owner/manager/director to be financially well organised. From our point of view: tax planning is invaluable.
Tax planning allows you to anticipate what your taxable income will be for the financial year therefore allowing you to determine your tax liability in advance. The knock on effect of having such information is that you have the ability to plan ahead as opposed to being restricted from achieving the taxable income that you may want to achieve. The consensus is that tax planning is associated with reducing taxable income and therefore minimising tax liabilities however, this is not always the case. If you have applied for finance recently then you would know that service credibility (having sufficient income to service debt) is absolutely crucial when it comes to obtaining finance. By following our tax planning process you will be better prepared for making a successful finance application.
It should be noted that taxation is an ever changing landscape. Each year hundreds of new rules and amendments are made which restrict or provide opportunities to minimise tax liability. A recent example of the latter is the 50% capital allowance which allowed for SMEs to obtain a 50% tax deduction on capital equipment. The Australian Tax Office and the Australian Government have provided further opportunities this year; yet, the biggest impact will come from them trying to restrict the advantages of trusts distributing to corporate beneficiaries. Although this new legislation has gone fairly unnoticed in the public media, accountants and tax agents are bracing ourselves for the biggest impact on our tax system since GST (in respect to businesses that operate through a Trust structure).
The main priority of tax planning continues to be the ability to improve your wealth position by having a tax effective structure accompanied by sound tax planning advice. This combination allows you to acquire more assets in a shorter timeframe which is why… tax planning is here to stay.