Taxation is a complex area, and becomes more so if you run a business or have several sources of income. Numerous factors will affect the amount of tax you should pay each year, and for many of us, fear of paying too little tax means that we often end up paying too much.
WHAT IS Tax Planning?
You must pay taxes. But there’s no law that says you gotta leave a tip.
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You want to pay the lowest amount of tax as possible, and you want to do so through legitimate and legal means. That is possible. By looking at your overall financial situation, you will be able to identify ways to decrease your tax liability. In effect, you may also be maximising your ability to contribute to your retirement plan, if you have any.
Tax planning is the analysis of your current financial situation for the purpose of minimising the amount of tax that you pay. However, you may see tax as something complex, and you are right about it. That’s more so if you run a business or if you have several sources of income.
As a tool for creating wealth, tax planning does not solely fall in the hands of accountants. What is important to remember is that accountants are mainly responsible for completing your individual tax returns from the previous financial year, not necessarily the current or future financial years.
what are the benefits of tax planning?
The fear of paying too much tax is common and that’s because many do not know their tax liabilities and entitlements or deductions. Tax planning exactly covers those.
LOWER TAX BILL
Everyone wishes to reduce the amount of tax that they pay but they don’t know how to do it. Tax planning involves strategies to help people pay less and save more.
With the implementation of tax planning strategies, money is freed and may be channeled to income-generating plans. Your money will do the work for you.
LESS TAX FOR YOUR HEIRS
Tax planning strategies mean that you may end up having more to pass to your heirs. However, with sound investment strategies, you may be able to lower the inheritance tax liability for your heirs.
We all know that the taxes we pay also benefits us in many ways. So while tax planning deals with minimising taxes, it also ensures that money continues to flow to our economy.
current taxation trends
From the Taxation Statistics of 2017 – 2018 by the Australian Taxation Office.
the average taxable income of men
the average net tax of men
the average taxable income of women
the average net tax of women
the average total tax deductions
HOW DO I GET STARTED?
Getting started on tax planning is simple. All you need to do is to contact us and then we can get the ball rolling for you. You can also take our Financial Goals Assessment Tool to explore the different aspects of your financial life.
Our specialist service includes, but are not limited to:
- Buying an investment property can reduce the tax you pay every year.
- Prepaying interest on investment loans can assist you with a one-year tax benefit.
- Salary sacrificing money into superannuation can significantly reduce your tax liability.
- Building a share portfolio may reduce your taxable income depending on your current marginal tax rate.
- Structuring investments correctly to reduce the overall tax you pay on earnings now and future capital gains (i.e. individual, trust, company versus superannuation, and pension structures).
- Plan for your retirement to ensure you are minimising your tax liability when you do eventually retire from the workforce.