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What is tax planning?

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As a taxpayer, you have the right to arrange your financial affairs to keep your tax to a minimum - this is often referred to as tax planning. Tax planning is legitimate when you do it within the requirements of the law. Nevertheless, you should not change your investment or financial arrangements only to avoid taxes. Effective tax planning strategies are those that allow you to achieve what you want while minimising the tax liabilities for you. While tax laws are more complicated than ever, the benefits of great tax planning strategies would arguably be more valuable to the taxpayers than ever before.

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Is the timing essential for tax planning?

 

It is quite common for taxpayers to start looking into their tax affairs a few months after the financial year end. This could actually make the taxpayers miss out some legitimate opportunities to significantly reduce their tax liabilities. If they had proactively arranged a few things before the financial year end, they could be in a better tax position. The tax laws also keep changing. Certain tax benefits might be available last financial year but not this financial year. Often, the best time to do tax planning is right before you make any important financial decisions, for example, buying or selling properties, making investment decisions, starting up or buying a business, planning to exit from your business, and planning to retire. Another best time to do tax planning is a few months before 30 June. This will help you see how you are doing financially, and if you are likely going to have additional taxable income, you would have time to implement the tax planning strategies.

 

 

Who will benefit from tax planning?

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For most people, it is not nice to receive an unexpected bill, especially a tax bill. No matters you are a salary earner, investor, business owner or retired person, there are things you can do to minimise your tax. A few arrangements may save you a minimum of a couple of thousand dollars to a few more thousand dollars or even more. As mentioned above, you need to proactively review your tax affairs ahead in order to achieve the tax savings. Then, you may use the tax saving money to help your friends or relatives, or even make donations to your charities.

  

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How can you get started?

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Tax planning is a specialist service and not every accountant will have the skills, experience, time or desire to provide tax planning services to their clients. We have developed a set of tax planning tools to provide customised tax planning services to salary income earners, investors, business owners and retirees. Please feel free to contact us to arrange a tax planning meeting.

 

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Vincent Wan

CPA, Registered Tax Agent

May 2017

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