This article first appeared in The Q Review Winter 2019 Edition. To receive your FREE copy – Subscribe here.
Our Fail-Safe Tax Minimisation Principles
Let’s make something very clear from the outset:
We are not anti-tax, and neither should you be either!
Taxes are absolutely necessary to make and maintain this amazing country we live in.
This safe, healthy, educated, tolerant and prosperous country we all love and that is the envy of the world.
However just as “profit” is not a dirty word, choosing to ensure you pay only the legal minimum amount of tax is also not taboo.
Tax is the single biggest lifetime expense you will incur!
Of course, it is very important to understand, especially if you have come from a foreign jurisdiction, that paying some tax is unavoidable in Australia, well, at least if you are actually making profits.
However, it is generally accepted that tax is the single biggest lifetime expense you will incur. This is particularly the case for anyone who achieves even a moderate level of business and/or financial success.
So surely it makes sense to minimise it at every chance you get (as you would with any other expense which doesn’t add to your business, nor provide you any direct personal pleasure).
That being the case, here is the first of our three fail-safe tax minimisation principles, which the most engaged CapitalQ Community Members employ to ensure they pay the absolute legal minimum tax and, in the case of business owners, to get above and beyond salary and wage earners on the financial ladder of life.
Fail-Safe Tax Minimisation Principle Number 1 – Every Little Bit Helps, It All Adds Up
This is a simple and logical principle which operates in three broad ways –
- Each individual tax saving strategy combined can add up to a significant saving over the course of a tax year.
The days of having a single strategy to make a significant difference are for the most part gone. You must take advantage of each opportunity, however modest, and let the savings build over the year.
- Achieving a tax saving each year, combined with each subsequent year, adds up to a significant reduction in your lifetime tax bill.
Tax minimisation is not a once off strategy, only over time can it make a real impact to your overall financial position.
- The increased savings, investments, or even better, business re-investment that results from your tax savings each year “compound” into a significant increase in your overall wealth and success over the course of your life.
We have all heard of the magic of compounding. Albert Einstein reputedly said “Compound interest is the eighth wonder of the world” and “He who understands it, earns it … he who doesn’t … pays it”. And ultimately, it is the compounding effect of all three elements of this principle, that allows those who use it, to get ahead of the rest.
To book your Year End Tax Planning Meeting call today on 08 9228 7100.
And keep an eye out for Part 2 in this series on maximising your tax minimisation in coming days.