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What is Tax Planning

Tax Planning is where the taxpayer very sensibly changes around or re-arranges their affairs so that their business and financial involvements will result in increased profitability (their primary objective) and minimise tax payable (their secondary but just as important objective). In professional language, Tax Planning is - "the process of organising a taxpayer’s affairs so that as far as possible legally or commercially, the liability of the taxpayer to income tax (or any other taxes for that matter) is minimised". This type of tax planning is loosely referred to today as tax avoidance. A better term is Tax Minimisation or even better - Tax Saving Planning.

What is tax saving planning?

Tax saving is an exercise which can provide many hours of enjoyment, believe it or not. It can be a stimulating occupation and where successful a profitable one. However, we stress again that avoidance is really the only game to play. Whatever arrangement you investigate; ensure that you remain within the area of avoidance. The line between avoidance and evasion can be thin.

Tax Saving is best if it is both legally right and morally right. Taxpayers have successfully implemented some avenues mentioned here. Others are worthy of consideration and may be acceptable if structured in the right manner. Examine each one and see if it is applicable to your situation.

There are in fact countless situations that you can utilise in minimising taxation legally. You are limited only by your imagination.

The purpose of planning

The purpose of this section is not to explore how we can all evade taxation. The sole purpose is to emphasis the importance of good tax planning. But what do we mean? Tax planning is the sensible re-ordering of your affairs so that your business and financial involvements are undertaken with profitability as the primary aim. Minimising your tax bill within the framework of the law is the secondary (but just as important) objective. Tax planning means striving to reduce tax, right? Wrong! The aim of good tax planning is not to reduce taxes but to maximise your "after tax" income. Think about it for a while. You may find that often it is better strategy to pay extra tax now in order to wind up with more "after tax" income at a later date. Whether we like it or not, the government will always be our "silent partner". The idea of tax planning then is to ensure that your silent partner does not draw more than they are entitled to. Just like any other business operation the share of profits must be fair and just and as dictated by the partnership agreement. In this case the agreement is the Tax Act and unfortunately we have little say in it.


Call Max Accountants today on 07 5580 4455 and talk to the Gold Coast's Business Tax Experts for Tax & Business Advisory services for the Gold Coast, servicing Helensvale, Coomera, Pacific Pines and Pimpama.


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