Tax Planning is best described as a review process to minimise your tax liability through the use of all available allowances, exclusions, deductions and exemptions.
Most people can legally reduce the amount of tax they need to pay at the end of the financial year. Put simply, tax planning is the legal way to keep your tax to a minimum.
It doesn’t need to be complicated, and everyone who pays tax can benefit from reviewing and estimate their tax position PRIOR to the end of the financial year.
There are a number of legitimate strategies available which the ATO accepts as fair and reasonable ways to manage your tax obligations within the letter of the law.
Tax Planning requires individuals and companies to give consideration – not just to the size of their incomes or profits, but also to the nature and timing of purchases, insurance coverage and the types of investments they make. These decisions affect everything from which tax bracket an individual is in, to the types of tax deductions they qualify for.
The following steps are involved in estimating your position for the current financial year and where you can reduce your tax:
With the advice of a tax accountant – you can investigate legal and legitimate options to minimise your tax liability. Remember fees paid to a tax agent for preparing a tax return are also deductible.
It is important you seek the advice of a Tax Agent because claiming for deductions or allowances which you are not eligible can result in penalties and fines.