28 May Preparing for tax time… now!
Tax planning is often viewed in a contradictory way – a last minute dash to arrange reduction of the year’s tax bill or maximise the refund. Why not take the opportunity to do something different this time… like start planning now!
Two of the simpler ways of managing tax include:
- deferring income until the following tax year – such as arranging a fixed deposit or other investment so that the income from the investment is paid after the end of this tax period; or
- bringing forward expenses that won’t accrue until the next tax year, by paying them this tax year. This option is most often achieved by taking out a loan or loans where interest is paid in advance.
Alternatives for reducing tax are available and may result in an overall better return in the long term. Different options are available depending upon your employment status, ie. if you are self-employed as opposed to being an employee.
Broadly speaking, some of the options include converting part of your income into superannuation contributions (salary sacrificing). This has the added advantage of building a valuable asset and an income for your retirement. In addition, don’t forget the tax breaks for making a contribution toward a superannuation fund in your spouse’s name.
If you are a small business owner you could consider bringing forward the purchase of business assets as you will get an immediate tax deduction for each asset you buy costing less than $20,000.
The strategy you choose, and there are many more available, all depend upon your personal situation and needs, but one thing that’s common to everyone is the longer you leave these plans, the less benefit you receive.
If you have questions, talk to a professional adviser now so you can have everything in place for June 30.
Act now and reap the rewards!
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.