Doesn't it seem as if tax time is always around the corner? This could be because there are, of course, various deadlines for paying instalments and a number of different types of tax. It pays, therefore, to have a plan to make sure that you are compliant through the year and especially if you are to take advantage of the various deductions and benefits available to you. What are some key strategies to bear in mind?
It's always important to look at how many deductions you may qualify for. Self-employed, in particular, can sometimes get a sizeable deduction if they make sure that they pay the maximum amount into their superannuation. Bear in mind the deadlines, especially when it comes to the end of the year. Just remember that the super fund may tax you a certain amount as well, so you need to consider your tax bracket and if there are any potential benefits.
Planning Income Versus Payments
Many businesses operate on a cash basis. Consider how much of this is due to income you're likely to get at the last minute (before tax deadline) so you can plan carefully. For example, you may want to pay some large or outstanding bills before the deadline, so long as you are sure you will get the money in. This may help you to reduce your tax liability.
Did you have some significant medical expenses during the year? If your out-of-pocket payments were over the threshold, then you can get a sizeable rebate of the excess amount. You will need to get documentation to support your claim.
Don't forget that you are expected to have private health insurance should your income be over a certain threshold. If not, then you may be expected to pay a surcharge. Consider taking out private health insurance coverage, if this affects you.
Accounting for Training
Finally, if you intend to take a significant training course as part of your business in the upcoming year, you may find it beneficial to pay for the course before the tax year ends. This will allow you to get that deduction against your current bill, even though you may not be taking the course until next year.
Make sure that you check with your accountant, so you not only take advantage of any benefits, but also ensure that you don't inadvertently make any mistakes.