WHO GETS TAX PLANNING ADVICE?
Answer: “Successful People and Successful Businesses”
All taxpayers are allowed to arrange their affairs in a manner that remains legal but which minimises their taxation liabilities.
The late Kerry Packer once told a Senate enquiry, “Of course I am minimising my tax. And if anybody in this country doesn’t minimise their tax, they want their heads read, because as a Government, I can tell you that you’re not spending it that well that we should be donating extra!”
Tax planning should be done with an overall view to increasing your total wealth. The most effective tax planning strategy is to consider how your business and/or investments are structured so to reduce your tax and create your wealth.
There are a number of strategies that you should consider before setting up any investment or business structure including;
– Consider the type of legal structure so to cap your tax by directing income away from an entity/individual paying a high rate of tax to an entity paying a lower rate of tax.
– Depending on your structure, consider the strategies to defer tax or take advantage of a more favourable tax rate.
– Your structure can reduce the amount of tax payable on the disposal of investment and business assets sold at a profit which can minimise future tax payable on sale.
It’s widely acknowledged that Australia has one of the most complex tax systems in the world. To avoid inadvertently triggering additional taxes, there are many areas which can be reviewed before 30 June to avoid unnecessary tax, including:
Treat inter-entity loans or loans made by companies to shareholders correctly, including payment of interest and meeting the minimum loan repayment
Pay last year’s profit distribution to company beneficiaries, or put loan agreements in place that comply with Div7A legislation
Trustees should make a resolution in accordance with the trust deed prior to 30th June specifying how the years’ trust profits are to be distributed
For Super Funds
Pay sufficient pension payments to members prior to the end of the financial year
Tax Planning is something that should occur all year round. Before you make any major decision, you should ask for advice to find out what the consequences are, so that you have the best chance of increasing your wealth.
Obviously, you should leave yourself sufficient time to consider and implement any strategies, and if those strategies have a 30 June deadline, you may need to start considering your options now.
If you would like to talk about minimising your tax while maximising your overall wealth, or ensuring that your end of year obligations are met, please contact us at Award Accounting.
DISCLAIMER: All information provided in this article is of a general nature only and is not personal financial, taxation or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this article (including Award Accounting for Business Success Pty Ltd, each of its directors and employees) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information.
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