Tax Minimisation Pitfalls

Paying taxes is part of any thriving career or business. This is true whether you live in a small city or in a huge one like Melbourne. That makes relocating futile if you merely want to avoid taxes. The same goes for lowering your income; it’s simply not sensible. However, you can make the most out of the situation by using various tax minimisation strategies. A word of caution, though, the Australian Taxation Office is stern in punishing taxpayers who willingly, or even unwittingly, violate the laws. When planning to minimise tax, don’t fall into these pitfalls:

  1. Not planning ahead. There is a deadline set for filing taxes and if you plan ahead, you do not only avoid the risk of incurring fines and penalties; you also have the opportunity to receive deductions by making prepayments, checking your debts and assets for write offs, reviewing your superannuation contributions and others. Call a small accounting firm in Melbourne or Melbourne accountant early to get proper advice and review your plans. You’ll realize that in taxes, timing is essential.
  1. Doing it by yourself. Well, you can, but it doesn’t mean you should. It’s easy to find several tax planning strategies online but which ones are truly applicable to your situation and how do you go about it? There are reasons why accounting services are in demand and efficient tax planning is one of those.
  1. Using the “other” strategies. Taxation strategies can be tax planning, tax evasion and tax avoidance. It’s important to know that only the first is legal and the rest are punishable by law. More importantly, understand the distinction between the three. Tax evasion happens when an income isn’t declared or when deductions you are not entitled to are made. If the law is followed but through contrived means, that’s tax avoidance.

Keep in mind that the only strategy you are allowed to use is tax planning. Simply put, tax planning is aligning your financial goals while considering the taxation system. While you try to do everything in good faith, taxation can be complex and the boundaries may be confusing. Thus, it’s highly recommended to have things reviewed by a Melbourne accountant or a small accounting firm in Melbourne.

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