For most, tax planning is typically done before the end of the financial year, in June.
At this time, you review your financial situation and likely tax position with your accountant, then also forecast what is likely to occur in the upcoming financial year. This process will help you forecast and budget for upcoming tax payments such as company tax, BAS or PAYG payments.
However, for some, it’s better to view tax planning as an ongoing process. This is particularly true if your circumstances change or are likely to change throughout the year. Some example may include:
- Your business income substantially increases or decreases.
- You buy an existing business.
- You purchase or sell an investment property.
- You sell an investment or shares.
- You receive an inheritance.
To best illustrate the benefits of tax planning, let’s use an example of a client. Overall several years, a couple received income from their two separate consulting businesses. As a result, their PAYG obligations were consistent. However, midway through the financial year, one partner acquired an existing business, which produced significant cashflow over and above her existing annual income.
With some foresight, the couple met with their accountant to calculate their likely tax obligations based on the increased income. This ensured that they would put aside enough money to meet their PAYG tax adjustment in the current financial year, and then plan for the ongoing PAYG obligations.
It may sound like common sense, but the value of effective tax planning shouldn’t be underestimated. You’ll certainly feel a lot more comfortable come tax time.
To book a tax planning session call (03) 5331 3711 or (03) 8391 3063.
DISCLAIMER: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.