Paying Too Much in Taxes? How a Tax Planner Can Help

Fewer things are more certain than death and taxes, as the old saying goes. Unfortunately though, avoiding taxes isn’t possible and can even lead to fines and imprisonment if taken too literally. But are there ways to reduce your tax burden without risking tax evasion?

Don’t Break the Law

However you may personally feel about the purpose and ethics of taxation, the government views tax evasion as a crime. Overly complex tax avoidance schemes, offshore accounts, or knowingly lodging fraudulent tax returns can bring additional scrutiny to you and your business and potentially lead to heavy penalties. Any tax advisor that recommends illegal schemes should be soundly avoided.

Structure Your Taxes Carefully

Do you operate a business? What is its structure? Depending on what form of business you take, you’ll have different tax effects. For example, if you operate your business as a sole trader or partnership you may be liable to pay anywhere from 0-45% in taxes, and if you operate your business as a private company your tax rate will vary between 25-30%, depending on the tax year, income and other variables. Your tax advisor will be able to recommend the best structure for the needs of you and your business.

Follow Tax Timing

The Australian fiscal year is from 1 July to 30 June every year. If you and/or your business earns income during this period or you have incurred expenses, you can be pretty confident that it will need to be declared on your tax return.

Most businesses have fluctuating income and expenses that can vary from fairly stable to extremely volatile.  There are many rules about what type of income and expense needs to be declared and when, so planning taxes every year can be quite a challenge and may lead to many inefficient declarations.

Take Advantage of Tax Benefits

Following on the previous point, there are a myriad of tax exemptions and tax benefits that you may be eligible for. If you don’t claim them, the government will happily take your taxes anyway, often far higher than they could have been if you were aware of exemptions.

Badawy Large & Powers

Speak to us at  Badawy Large & Powers for professional tax return accountants Melbourne.

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