Developing a Tax Strategy

You might have heard the term "tax strategy" being thrown around – but it is more than just a buzzword. Having a tax strategy in place can make a big difference in managing your finances and putting you in a position to plan and create wealth for the future. Wealth creation doesn't happen by accident.

What is a Tax Strategy?

A tax strategy is like a plan or roadmap that we can create together to pay the right amount of tax and allow you to meet your wealth creation goals. Paying the right amount of tax is important. While it may be tempting to spend all the profit from your business on business-related expenses to minimize your tax, it's essential to consider the potential consequences. This kind of spending, if solely done to reduce your tax, may have unexpected impacts, such as affecting your ability to access finance from banks and lending institutions due to a lack of profit.

A tax strategy should be developed with your short, medium, and long-term goals in mind – not just with the goal of minimizing your tax in the current financial year.

Planning for Your Wealth Creation Goals:

Developing a tax strategy helps you plan for your financial future. Whether it's buying a house, paying for your children's education, or retiring comfortably, making smart financial decisions is crucial. A tax strategy enables you to make informed choices about saving, investing, and managing your money, thereby helping you reach your financial goals more effectively.

For example, you might plan to maximize your superannuation contributions each year for the next few years to build up enough funds to purchase a commercial property for your business. Alternatively, you may strategically show increased income in your tax returns for the next two years to access finance for a property purchase. These decisions are best made well in advance of the end of the financial year.

Our Process:

As part of our advisory service offering, we work with you to document your wealth creation goals and the necessary steps, both for the current year and the upcoming years, to achieve these goals.

Each year, we review this strategy with you and fine-tune it as we go, considering changes in your business, modifications to tax legislation, and new opportunities that may arise. This approach takes tax planning from being a mere compliance exercise to something that actively contributes to your business and decision-making process.

By developing a tax strategy, you can optimize your financial situation, ensure tax compliance, and work towards your wealth creation goals effectively.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as professional financial or tax advice. It is recommended to consult with a qualified tax professional or financial advisor for personalized guidance based on your specific situation.