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In an ideal world, taxes would consume very little of our time and attention. In reality, taxes have the power to keep business owners up at night. Income tax is one of the largest expenses for most businesses and individuals, so it requires careful planning, budgeting and monitoring.

 

Fortunately, it’s possible to manage your taxes and gain control over their effect on your finances. When your taxes are fully understood and anticipated, you can regain control over cash flow, debt repayments and other obligations.

 

At Altus, we like to refer to “tax planning” as “annual planning” because taxes are an integral part of overall financial plans. Additionally, this planning must take place every year to keep up with changes in your business, changing tax codes and your upcoming goals.

 

In this post, we’ll look at six beneficial tax planning strategies that can help both businesses and individuals to minimise worry and maximise good results.

1. Properly plan your cash flow
2. Carefully consider your tax payment dates
3. Pay superannuation liabilities
4. Bring forward other expenses
5. Make additional superannuation contributions
6. Vary down instalments

 

1: Properly Plan Your Cash Flow

Most businesses experience cash flow highs and lows as they purchase supplies and equipment, pay their employees and collect payments. Large tax bills can hijack cash flow, putting undue pressure on businesses and household finances.

 

By planning out your cash flow and anticipating your tax deadlines, you can smooth out the roller coaster and focus on more critical aspects of your business. 

 

2: Plan for Payment Dates

Missing a tax payment date can have serious consequences, like fines and strain to your cash flow. Be prompt by carefully planning for your tax payments so you can avoid unnecessary expenses.

 

Scheduling tax payments ahead of time and budgeting for them well in advance will reduce your anxiety and position you for steady success.

 

3: Pay Superannuation Liabilities

If you need an additional deduction in order to reduce your tax bill, consider using superannuation as a tax strategy.

 

You can obtain a deduction a year earlier by paying your superannuation liabilities. Planning for an early deduction can give you increased flexibility in your budget and cash flow.

 

4: Bring Forward Other Expenses

This tax planning strategy is similar to the strategy of paying superannuation liabilities. When you bring forward other expenses, you can obtain the deduction this year, thus reducing your immediate tax obligations.

 

5: Make Additional Superannuation Contributions

Create a win-win situation by increasing your super balance while reducing your taxes at the same time. You can do this by making additional superannuation contributions to your super fund.

 

Many people find that they quickly adjust to the smaller budgets necessary to afford additional super contributions. After a while, you don’t miss the extra money, but you do enjoy watching your superannuation balance grow with increased speed.

 

For more information on voluntary superannuation contributions, download a copy of our popular Retirement Planning eGuide.

 

 

6: Vary Down Instalments

Here’s another tax strategy you may not have used before. If you vary down instalments, you can avoid overpaying your income taxes and having to wait until your return is lodged to receive the cash back. Having this additional cash today gives you the capability to use it to pay other bills or reduce your debts.

This strategy helps you to even out your cash flow and take back control over the money that was out of your hands for the greater part of the year.

 

Benefits of Annual Tax Planning Meeting

Annual planning is critical for businesses and individuals who want to take control of their finances and position themselves for success. As you implement annual planning, you can expect to realise the following benefits:

• Improved cash flow
• Better reporting
• Improved goal setting and tracking
• More control over your money
• Improved decision-making

Your annual tax planning process doesn’t need to be complicated, but it should be thoughtful. Working with your Altus adviser, you can evaluate your current tax strategy and find ways to optimise your tax situation further.

 

Have you had your Annual Planning Meeting (APM)? To learn more about the Annual Planning Meeting, or to talk about any other financial concerns that keep you up at night, contact us at Altus Financial.