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What are my tax saving options?

20th April 2012

By Kelvin Tyler, BMO Partner 

The key to minimising your tax is to start planning early, because once 1 July comes around it’s often too late.  Some would say that the horse has already bolted.

A tax update is the ultimate solution.  A tax update is a tax planning process that BMO begins with our clients around April each year. 

Firstly we look at your figures from the first three quarters of the financial year, then we work with you to prepare a monthly estimate of income and expenses for April, May and June.  From here we project your taxable income and estimate what your  tax bill is likely to be. 

Then comes the fun part. (Yes, accountants have a warped sense of humour,  we think tax planning is fun).  We look at strategies that we can use, within the tax office rules, to reduce your tax liability and we give you a clear action plan on what you need to do before 30 June.

Here are five tips for effective  tax planning.

1. Start early – it cannot be stressed enough how important it is to start tax planning in April or May.  Running around like crazy trying to buy, sell, implement things on 29 June is not the best approach.
2. Choose the right depreciation methods – There’s pooling, immediate write offs, scrapped items, as well as any recouped income due to sales or trade-ins. It can be a tricky area, so make sure you’re using the right method depending on how you use your assets.
3. Superannuation payments – If you have staff, then remember to pay your June superannuation payment before June 30 to be able to claim it in the current financial year.
4. Purchases and sales – If you are purchasing a large capital item in the last quarter of the financial year, then make sure you get advice on the best way to finance the item and the best timing for this.
5. Don’t focus only on saving tax – tax planning is critically important.  However, you need to make sure you are making sound business decisions. Don’t spend $50,000 just to save $5,000 in tax if the purchase is not driven by a genuine business strategy.

No business is too small or too large to benefit from tax planning – so book your tax update appointment at BMO today.

Information in this article is general in nature and readers are advised to seek advice specific to their circumstances.

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