This article first appeared in The Q Review Winter 2019 Edition.  To receive your FREE copy – Subscribe here

Doing tax planning after year end, is no longer a viable option (if it ever really was).

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.

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.

In Part 1 of this Blog series we discussed our first fail-safe tax minimisation principle.  You can read about it here – Maximising your Tax Minimisation – Part 1

In Part 2, we present our second fail-safe tax minimisation principle, 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 2 – It Must be Done Before the Year is Over

One can argue this was always the case, but certainly no one can argue against this fact now.  Tax Time is too late to perform any real, legal, tax minimisation!

Just remember, often, creating transactions after the event, and saying they are reflections of decisions or events made in the past when they aren’t, is likely not tax minimisation, it is likely fraud!

Tax Time is too late to perform any real, legal, tax minimisation!

Regardless, the tax laws are being continually tightened to reduce what can be done after the event.

Examples include –

  • Salary Sacrifice Arrangements (including Director Superannuation) – which must be executed before any sacrifice occurs
  • Loan Agreements (including meeting minimum repayments) – you can’t now, if you ever could, backdate a loan agreement nor an obligatory loan repayment
  • Trust Distributions (The Biggie!) – it is nothing short of appalling how many accountants out there still do their trust distributions resolutions after year end. Any trust distributions done this way are “ineffective”, and if you ever find yourself in front of an ATO Auditor, it will be used against you as leverage, even if it has nothing to do with the matter under audit!
  • Director’s Bonuses – must be done before year end
  • Partner’s Salaries – actually must be done before the year even begins!

To book your Year End Tax Planning Meeting call today on 08 9228 7100.

And keep an eye out for the concluding Part 3 in this series on maximising your tax minimisation in coming days.