Tax time provides an opportunity to thoughtfully review your finances and plan ahead. By planning early and getting professional advice about all possible deductions and steps you may need to put in place now, you can reduce stress and align your taxes with broader financial goals. A little proactive preparation allows you to engage a strategic approach, in order to legally minimise tax obligations.
KeyPoint Accountants recommends starting your tax planning as early as February or March, not leaving it until the last couple of months before the June 30 EOFY. In this article, we’ll discuss seven compelling reasons to begin your tax planning today.
If you’d like to get expert guidance on early tax preparation from one of our Gold Coast-based business accountants, click here.
1. Understand Your Complete Tax Position
The first step in tax planning is gaining clarity on your current overall tax position for the financial year to date. This includes:
- Reconciling your books to end of last month, in order to get a mid-financial year picture
- Running the P&L, Cashflow Statement and Balance Sheet from your accounting software
- Forecasting your income and deductions to June 30
With this bird’s eye view of your total tax scenario, you can then make informed decisions about tax strategies, deductions to maximise, income to defer, and how to align your taxes with your financial goals.
Without understanding your full tax picture, you run the risk of missing deduction opportunities, ending up with an unexpectedly high tax bill, having inadequate tax provisions, or making counterproductive financial moves.
2. Proactively Work Towards Financial Goals
Taxes fit into your overall financial life. The strategies you implement around income, deductions, asset purchases, retirement planning, and more can help or hinder your ability to achieve major financial goals.
For instance, properly timing the sale of company assets or equity transactions can free up key funds for investing in expansion or new projects.
Tax planning looks at your holistic financial situation, not just isolated tax numbers, helping set you up for future success.
3. Legally Reduce What You Owe
Of course, a major incentive for tax planning is reducing what you pay to the ATO by maximising available deductions and tax breaks. Common tax reduction strategies include:
For Businesses:
- Claiming instant asset write-offs before June 30 deadline
- Writing off bad debts or obsolete stock
- Delaying invoices to push income to next year
- Additional owner super contributions
- And other more strategic approaches you might receive professional advice about
The specifics depend on your situation, but the tax savings can be substantial with smart planning.
4. Avoid Stressful Tax Debts and Penalties
In addition to higher tax bills, lack of planning can result in penalties for issues like:
- Underpaying quarterly PAYG instalments
- Failing to meet super guarantee obligations
- Not complying with Division 7A or trust distribution rules
This quickly becomes stressful if you don’t have adequate cash flow to cover unexpected shortfalls.
Putting the right tax strategies in place helps prevent nerve-wracking scenarios of scrambling to pay tax debts, interest, and fines.
5. Strengthen Lending Capacity
Tax planning isn’t all about minimising owed taxes. Sometimes showing consistent, strong income sources over time puts you in better position for future financial facility applications.
You may have plans to purchase an investment property or expand your business, which relies on demonstrating serviceability and savings capacity to banks or lenders.
Smart tax planning looks ahead at these possible goals and helps structure your finances optimally.
6. Tap Into Tax Incentives
The government frequently offers tax incentives and breaks to encourage behaviours like investing, saving for retirement, operating a small business, spending on R&D, and more.
Without tax planning, you risk missing out on credits, concessions, write-offs, and other tax minimisation opportunities waiting to be utilised.
Common incentives include:
- Instant asset write-offs for businesses (now reduced)
- R&D tax offsets
- CGT concessions for small business owners
- Co-contribution to boost super savings
Staying abreast of available incentives through tax planning ensures you can fully utilise them.
7. Leverage Expert Guidance
The full tax planning landscape is complex. With frequent rule changes, intricacies around investment structures, compliance obligations, and more – it’s hard for most people to stay on top of everything.
This is where leveraging KeyPoint’s tax accounting expertise can make a difference. From personalised advice to handling compliance filings, our professional guidance helps you:
- Confidently navigate tax intricacies
- Apply the latest rules correctly
- Utilise specialised tax knowledge
- Create customised strategies
Rather than getting overwhelmed, leverage experienced tax professionals to ensure taxes remain optimised.
Let’s Connect to Start Your Tax Planning
As you can see, getting an early start on tax planning before June 30, produces multiple advantages. From maximising deductions to avoiding penalties to revealing financial blind spots to tapping into incentives – it puts you in control.
Don’t leave it until the last minute and risk missing opportunities.
As an experienced accounting firm, KeyPoint Accountants can help you with:
- Personal and business tax planning sessions
- Optimised tax strategies customised to your situation
- Advice and answers from qualified tax professionals
- Proactive compliance filing management
Contact us today so we can help you put the right tax planning foundations in place. The sooner we start, the more tax you can potentially save.
Now is the ideal time to get the ball rolling!
