Benefits of strategic tax planning

The financial year is quickly coming to an end on 30 June 2024 and unless you’ve already put effective strategic tax planning steps in place, you may be wondering what you are in for.

Strategic tax planning throughout the year is important for both businesses and individuals alike to help you minimise your tax liabilities, maximise savings and also help you achieve financial goals.

Income tax for both businesses and individuals are a significant factor to consider. But there are ways you can optimise your situation at tax time through strategic tax planning which abides by tax laws and regulations in Australia.


What is strategic tax planning and why is it important?

Tax planning involves strategically arranging your financial affairs to keep your tax to a minimum while ensuring compliance with all Australian Taxation Office (ATO) regulations.

Beneficial to both individuals and business owners, a strategic approach to your tax helps you get the most out of your financial situation whilst minimising liabilities at tax time.

Tax planning should be a priority throughout the year. That way you can strategically time income and expenses, which can substantially impact your tax liabilities.


What to do if you haven’t been tax planning?

The 30th of June is fast approaching. Whilst strategic tax planning is a proactive and ideally ongoing approach, there are still opportunities to optimise your finances to help reduce costs and maximise savings at tax time.

Record keeping is the most important step towards effective tax planning. It’s important that you have records and evidence of income, expenses, bank and other goods and services taxes (GST) recorded for the past five years. This information is critical to support any claims made upon tax return.

If you have good documentation in place, our tax accountants can help to ensure your documentation is in order and review opportunities for claims which you may not have considered, which can lead to more savings from your tax return.


Want to take a strategic approach to tax planning?

Seeking help from a professional who understands the ins-and-outs of your business and the tax system is a good way to get ahead and ensure a consistent, strategic approach to your business or individual taxes.

In saying that, there are steps you can take to help improve your circumstances and to be proactive ahead of tax time.

Ensuring your business has sophisticated accounting software which enables you to easily track expenses and income is a good start. Xero is a powerful tool for businesses which allows you to easily monitor finances, manage invoices and oversee your cash flow.

As Xero Gold Partners, we recommend and use this software every day, and we know the value that it provides to businesses in the accounting and record-keeping space.


Common tax strategies to help you take a proactive approach to tax management

  1. Utilise your deductions

Individuals can claim deductions for work-related expenses, donations, education expenses, and other allowable deductions. Businesses can also claim deductions for expenses like operations, equipment, and employee benefits.

Records kept throughout the year for both the individual and business owners are key to maximising deductions before the EOFY.

  1. Consider optional superannuation contributions

Contributing to superannuation funds can provide tax benefits to individuals. Contributions made by individuals or their employers to super funds are generally taxed at a concessional rate, and investment earnings within the fund are taxed at a lower rate.

  1. Consider your small business tax concessions

Small businesses may be eligible for various tax concessions, including simplified depreciation rules, immediate deductions for certain start-up expenses, and capital gains tax concessions. Be sure to do your research on small business tax concessions to see what your small business could be eligible for.

  1. Time your purchases

Prepaying expenses that may occur in the following month (July) following the taxable period allows you to reduce your taxable income for the current financial year. Timing the purchases of applicable items is a good way to maximise your tax return and determine which financial year you want your purchases considered for.

  1. Work with a professional

One of the problems many business owners face is not just managing documentation for strategic tax planning, but also having the time to manage their tax requirements and consider opportunities for savings throughout the year.

Working with a professional, like our team at Valorium Advisors, gives you access to experts who can help manage your finances and provide guidance on how to optimise your financial situation for tax purposes throughout the year.

If you’d like to discuss your tax needs and finance management further, book in a meeting with us!

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