9 reasons Why NOT to leave tax planning until June

Tax Planning is a process with the potential to reduce a tax liability legally and should be approached proactively and with a clear objective well before the end of the financial year.

Every year it seems to creep up out of the blue, even though we know the date well in advance and it doesn’t change. It is 30 June every year!

This makes April is the perfect time to talk about tax planning as it gives you plenty of time to implement what you need before the 30 June deadline.

It is vital to understand your current financial position well in advance as it helps you to allow for payments that need to be made or expenses that need to be delayed prior to June 30. Not having an understanding well in advance doesn’t give you the time to make necessary changes which means you cannot take full advantage of your financial position.

Here are 9 reasons why you should never leave tax planning until June:

1. Understand your overall tax position – this gives you a bird’s eye view to allow you to make informed decisions based on where you are at right now.

2. Allow for legal deductions before the EOFY deadline – leaving things to the last minute means you might not be able to claim deductions that improve your taxable position (or you haven’t allowed the funds to do so)

3. Avoid underpaying super – oopsy, if you don’t allow enough in the bank account for your super payments can be a big problem, especially if you have employees. If you want a deduction for your super payments these need to be received by the fund before 30 June.

4. Chase bad debts and identify what might need to be written off – you need to allow time to chase any payments due to you and to also understand your cashflow position.

5. Defer income to the following year if needed – you might be able to defer some income to the following financial year and, with stage 3 tax cuts being approved, that will put income into a lower tax position this year.

6. Check the timing of expenses – understanding what and when expenses are due will help with cashflow planning and understand your expense priorities. Note also that tax rates will generally be lower from 1 July so deductions in this year will be more effective.

7. Allow for Stock takes – If you carry stock you need to not only carry out a stocktake but identify obsolete stock to be written off or deleted from future lines.

8. Tap into tax incentives – your accountant can help you understand if there are various tax incentives that you will be eligible for and this often requires forethought and pre-planning, particularly if you need to purchase equipment.

9. Apply the latest rules – changes in laws or policy might impact your position so your accountant may need time to apply these

To book a review and start your tax planning for all those reasons listed above, please contact our team