Tax Planning Tips

In his blog “when should you start looking for a new accountant” Helder discussed three factors when searching for a new accountant, today I look at one of those factors – timely advice.
 
There are good surprises and bad surprises.  If we are surprised with something positive we may feel feelings of happiness or joy, whereas a bad surprise may make you feel anxious or disappointed.

Most people would consider an unexpected income tax bill to be a bad surprise.
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But what if you could have mitigated the amount or at the very least expected or managed the outcome?  You more than likely would have planned for it by re-allocating your business capital by setting aside money or bringing forward that long overdue machinery investment.

GrowBC are not magicians, but we can help you estimate and manage the amount of income tax you will pay in a timely manner.  By timely, we mean before 30 June each year – we hate delivering the news that you have unexpected income tax to pay 12 months after you could have taken any action.

We cannot make your income tax go away – that is illegal, but we can provide strategies to manage your income tax or simply estimate your income tax payable.  After all, income tax means that you have made a profit, so things can’t be all bad.
 
Some Strategies

1. Plan income tax and BAS payment dates – scheduling your anticipated tax payments will reduce your anxiety.
2. Pay Superannuation liabilities - superannuation is not tax deductible until paid and received by the superannuation fund, paying your superannuation liability before 30 June 2021 makes that payment deductible.  Payment to a superannuation clearing house is not sufficient, the payment much reach the Superannuation fund by 30 June.  The ATO considers that businesses contributing via the Small Business Clearing House should be contributing by 23 June 2021.
3. Bring forward planned outlays – do not simply spend to reduce your income tax, in business all outlays should be considered and planned.  Sometimes bringing forward by 12 months your IT upgrade may be beneficial.  Or pre-paying next year’s interest.
4. Make additional Superannuation payments
5. Ensure you have a Budget and Cash Flow
6. Defer income where possible
7. Review bad debts
8. Stock – identify any obsolete or old stock and scrap it or write down to its market value.

 
 
We are strong advocates of tax planning; however, just because Bob told you it is possible doesn’t make it so.  It is vital that any tax planning strategy is well thought through and researched by a professional.
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Tax Planning is ideally done in April or May of each year, if you would like to schedule a 2021 Tax Planning session with GrowBC, contact us here.

Paul Griffiths CA CTA