Importance of Tax Planning
As we are quickly approaching the end of financial year 30 June 2020, now is a good time to have a look at both your expected taxable income for the current financial year 2019-20 and your projected taxable income for 2020-2021 as they will help guide your tax planning strategy.
There are a few different types of tax planning that are useful for individual people, companies and organisations. Some of the tax plans include; short term tax plans and long-term tax plans. The short-term planning allows you to reduce taxes at the end of the income year whereas the Long-term plans allow you to plan at the end of the beginning or end of the financial year.
If you are expecting to have a higher income this financial year, compared to your projections/expectations for the next financial year, we can plan and propose the following strategies for you:
- Proposing to repay some of your 2020-21 expenses (such as your rent, insurance or subscriptions to professional associations) in the 2019-20 financial year. Up to 12 months of the following year’s expenses can be deducted in the current tax year.
- Taking advantage of the instant asset write-off, which enables you to immediately deduct assets you purchase for your business costing less than the associated threshold (whether the asset is purchased new or second-hand).
- Reviewing and postponing some of your invoicing for the current tax year, if appropriate.
- Topping up your voluntary superannuation contributions.
- Reviewing your debtors and writing off any unrecoverable debts.
- If applicable, deducting any start-up expenses – such as obtaining legal or accounting advice on your business structure, and fees in relation to establishing the structure (eg. ASIC company registration fee).
** In relation to long term planning we can assist you with strategies such as:**
- Asset Protection Position
- Estate / Succession Planning
- Business Strategy and Optimisation
- Business Exit Readiness
Overall, there are many reasons why tax planning is important. If you would like to know how you can begin to manage your tax more efficiently, whether you own a business or are a private individual, speak to us today.