Seek tax accounting services to get you ahead in business financial planning. Learn more about reducing your taxes in this blog
In this world, nothing is certain but death and Taxes. Or so said Benjamin Franklin. But given the inevitability of having to settle your tax debts, the least you can do to keep the ATO from running after you is to minimise your tax liabilities. Reducing your tax liabilities is an ideal tax planning strategy that empowers you to hit that sweet spot between conforming to Australian taxation laws and keeping your hard-earned profits in your pocket. Are you familiar with legitimate tax reduction techniques? If not, here’s a list that will surely change the way you do your taxes:
Declare the correct income.
Take some time to check the contracts you’re signing into with your clients. Use this to determine the ideal frequency of declaring income for the products sold or the services rendered. This way, you can help calculate income tax better and likewise, file for the necessary deductions, if any.
Write off bad debts.
If your business is owed money and yet your debtor is unable to repay the loan, you may write this off as a bad debt. A bad debt can significantly help you in reducing your tax bill. Specifically, writing off bad debts can help you cut your income tax liabilities.
Include employees’ bonuses.
Ideally, you should keep track of the specific amount of cash spent on your employees’ bonuses. These bonuses are very important in the calculation of your tax bill. The best way to go about quantifying your employees’ bonuses is to round the numbers up right before the financial year draws to a close to obtain a tax deduction for these in the current financial year.
Contribute to your super.
If you are not familiar with salary sacrifice arrangements, perhaps now is the best time to refine your understanding of this concept. Salary sacrifice is a very effective way to induce tax savings. By making a pre-tax contribution, you will be entitled to a 15% concessional tax rate on the contributions within super.
Discuss options with your accountant.
There are many other ways to reduce your tax bill. However, if you are not knowledgeable about Australian taxation laws, there is a distinct possibility that the tax planning strategies you adapt will lead to serious problems with the ATO. Whether you do this intentionally or not, errors relating to your tax compliance often lead to penalties and interest charges. To avoid all of these, your best option is still to seek the expert advice of your accountant.
There’s no better way to deal with your tax bill than to pursue legitimate ways to cut down on your tax liabilities. To know more about the best practices in tax planning, you may get in touch with our qualified advisers at HTA.