8 ways you can pay less tax (but you need to act quickly)

Time is running out.

If you want to take a few simple preventative measures to minimize or defer how much tax you will pay for this Financial Year, you need to do two things:

  1. Read the following 9 point checklist, then
  2. Call or email us as soon as possible so we can make a time to sit do with you to assess which of these preventative measures can be done for you in your circumstances.

Depending on your situation, this tax planning process could save you many thousands of dollars. That’s cash in your bank account, rather than the Tax Office’s.

After all, why pay one more dollar in tax than you have to?

I’m sure you have better uses for your money, such as investing in your future or just investing in the here and now and rewarding yourself with a little ‘lifestyle indulgence’.

Now … to the checklist. Tick each item you think is relevant to you:

Review debtors Your income tax is payable on any invoices you’ve issued, even if you haven’t been paid. Don’t pay tax on any invoice you know won’t ever get paid. Review the list of those who owe you money and write off those ‘bad debts’ now.

Review your stock levels The value of your closing stock directly affects your business profit, the higher your stock value the higher your profit and tax. Review and identify any obsolete or old stock and scrap it or re-value it to its correct value. Individual items of stock can be valued at cost, market value, or replacement value.

Review your business assets Write off any obsolete items that are recorded as assets but no longer have a future benefit to the company.  This deduction will act as a one-time tax benefit in the current period

Defer income — A simple tip that can defer a lot of tax for you If your cashflow allows, you may consider deferring some of your invoices after your fiscal year end. If the income was not invoiced this financial year, it can’t be taxed this financial year. Before taking this option we recommend having a budget to manage these months’ income and expenses. We can help you with that.

Review your invoices issued If you have invoiced someone in advance for services you will provide in the next financial year, then you may not have earned that income in this tax year. That income may belong in the year you provide the service. Again, this is something we can work out with you when we meet for tax planning.

Pay the June quarter superannuation Superannuation if paid on time is deductible when paid. Since you have to pay the 9.5% superannuation by 28 July, bring it forward a month and pay it now and claim the deduction now. Why wait a whole year to reduce your tax?

Employee and management bonuses Bonuses to employees and management are deductible when the business has committed to paying them and it is not subject to any discretion. So finalise and sign off on the bonuses to be paid and reduce this year’s tax.

Capital Gains Tax  Minimizing your capital gains tax is often about timing. Ensure the asset has been owned for at least 12 months. If you already have a capital gain, are there any investments making a loss you can sell? Do you qualify for any capital gain rollover relief concessions? (Again, we can guide you here.) Capital gains tax is a whole topic on its own, and the potential savings are so great, it is definitely an area in which you should seek our guidance.

If you ticked any of the above items, then we need to talk. And soon.

Call us now on 705-745-8390 or email Cathy at  cmartin@gauvreaucpa.ca to make a time to meet and discuss your tax planning options.