Australian tax laws can be complicated to understand. You can therefore find yourself paying hefty taxes and getting a minimal return during tax season. However, if you implement the right tax planning strategies, you can navigate the tax code and minimise your burden. This can enable you to have a little more money in your pocket and enjoy a larger return during tax season.
There are several strategies you can implement to reduce your tax burden. In order to take full advantage of them, you need to work with the right tax services company so you can receive the best advice possible.
Carry forward your tax deductions
One of the first strategies that tax professionals will recommend is to carry forward your tax deductions in order to reduce your taxable income. If there are any activities you or your business will do that will lead to deductions, you can claim them in the current financial year so that your taxable income can become reduced. Such a strategy is important during tax planning
Expenses such as business repairs and gifts purchased for employees/clients can be brought forward to the current financial year.
Make use of the Capital Gains tax discount
The capital gains tax is a tax that is applied on assets that increase in value over time. These include shares, a house, or a business. When the asset's value increases over time, a tax is applied on the increase in value because it is treated as income to you.
There are strategies you can use to decrease the amount you owe on capital gains. Individuals or trusts that own appreciating assets can obtain a 50% discount in the tax owed (for individuals) and 33% for trusts.
Companies are not entitled to this discount. You should therefore seek to own appreciating assets as an individual or through a trust, as opposed to through a company. This allows you to take advantage of the capital gains discount.
Maximise your business deductions
If you are operating a business, there are several deductions you can take advantage of as part of your tax planning. Costs such as bad debts, written off assets, obsolete stock, and maintenance costs can be used to deduct your tax burden during business operation.
Defer your income
Deferring your business income can allow you to pay the owed taxes during the next financial year, reducing your current tax burden. Keep the magical date in mind during tax planning: June 30th.
You can defer your billing to be due after June 30th, arrange for interest payments to mature after that date, and put off all unearned income that you may have received, but not yet earned. For more information, contact an accountant.