Tax planning is not just about compliance; It is one step towards creating your financial freedom. With strategic tax planning, you can minimise your tax liabilities, maximise your savings, and create a solid foundation for long-term financial success.
What Pain Does Tax Planning Remove from Our life?
Tax planning helps remove various pain points from our lives, including:
- Removes the pain of financial stress by minimising tax liabilities and maximising savings.
- Eliminates uncertainty by providing clarity and certainty regarding tax obligations.
- Alleviates compliance concerns, reducing the risk of penalties, audits, and legal issues.
- Manage cash flow effectively, avoiding cash flow challenges caused by large tax payments.
What Opportunities does Tax Planning create in life?
Tax planning creates various opportunities in life, including:
- Allows individuals to minimise their tax liabilities, resulting in increased savings.
- Effective tax planning helps optimise cash flow by strategically timing income and expenses.
- Tax planning provides opportunities for individuals to allocate more funds towards investments.
- Provides access to valuable tax deductions, credits, and incentives.
What are the KPIs to measure
- Tax Saving
- Cash flow
- Director Loan
- Tax Liability
- Dividends & Distributions
- Non Financial
- Certainty about tax obligations
- Resource Planning
- Peace of mind
What are the different methods of Tax Planning
There are various methods and strategies for tax planning. Here are a few different approaches:
- Income Allocation
- Timing of income and expenses
- Capital Gains & Losses management
- Tax Efficient spendings & investments
- Entity Structuring
- & more
What are the positive impacts of Tax Plannings?
Tax Planning can have many positive impacts on our life, including:
- allows individuals and businesses to strategically minimise their tax liabilities, resulting in potential savings.
- improves cash flow by providing individuals and businesses with more disposable income.
- Promotes financial stability by ensuring that individuals and businesses have a clear understanding of their tax obligations and can meet them in a timely manner.
- support business growth by optimising tax structures, taking advantage of tax incentives, and maximising deductions.
What are the negative impacts of Not doing Tax Planning?
Not doing Tax planning can have a number of negative impacts on our life, including:
- Failing to engage in tax planning can result in higher tax obligations, leading to a reduced ability to save, invest, or meet financial goals.
- Without tax planning, individuals and businesses may overlook valuable deductions, credits, and incentives, resulting in missed opportunities to reduce their taxable income and save on taxes.
- Not considering tax implications can lead to cash flow challenges, particularly if individuals or businesses are unprepared for large tax payments that could strain their financial resources.
- Lack of tax planning increases the risk of non-compliance with tax laws and regulations, potentially resulting in penalties, audits, and legal issues.
High Level Roadmap
- Gathering financial information
- Setting financial goals
- Analysing tax implications
- Identifying tax-saving opportunities
- Implementing tax strategies
Ms Taylor is an NDIS support worker and owns a proprietary Limited company with 10 payroll staff members. Her estimated Tax payable for the year was $64k with a taxable income of $259k.
We implemented the following strategies in her Tax planning
- Paid Director fee to Ms Taylor and her spouse for $90k.
- Paid $27,500 Superannuation to the directors.
- Paid Superannuation for the staff for the June Qtr in advance.
- Prepaid expenses such as rent, conference fees etc worth $20k for the business before 30 June.
- Bought a business Car for $50k to utilise the $150k temporary expense claim finishing on 30 June 2023.
The net result was a saving of approx $42k tax for the company
Remember, this is just a general guide and each organisation is different, so it’s important to properly review your finances with a cost-benefit analysis before making any big decisions. Our NexZen tax experts can provide personalised advice and can help you find out what you can claim as a small business. Get in touch to book a discovery call.
Until then, thanks for reading and if you liked this or you know someone who would also find this helpful please feel free to like and share. See you next time. Can’t wait.