The Value Add – August 2014
With over one month of the new financial year already gone and lots of tax returns lodged, the common reason for people lodging their returns is to manage their tax cash flows. Whether it be getting a refund back, or lodging a return early to ensure that quarterly instalments for the remainder of the financial year are reduced, the timing of tax payments can be just as important as the amount.
For those not lodging early, just knowing how much is due later in the year allows for planning of future payments, giving plenty of time to put the necessary money aside without a last minute drain on the bank account.
The other piece of the puzzle in minimising the impact of tax is to seek out advice at the appropriate time. Whether it be entering into a new business, exiting an existing one, restructuring to get better tax outcomes, or getting into or out of investments (such as shares, property investment or development), obtaining advice before taking action is imperative to achieving a great outcome.
As the saying goes, an ounce of prevention is worth a pound of cure.
The Value of Advice
When it comes to doing anything that has tax consequences (e.g. setting up or running a business, buying or selling assets such as shares or property) it is important that these actions are taken in the way that still achieves the business or investment outcome sought, while minimising the impact of tax on the transaction.
The usual process for those not used to seeking advice goes something like this:
1. Get an idea
2. Take action
3. Get ready to lodge a tax return or BAS
4. Find out tax is payable
5. Want to change the way the transaction is interpreted to reduce the tax
6. Get advice
7. Understand how the transaction or business should have been structured
8. Realise the outcome cannot be changed
What if the process was turned on its head, what would the outcome be?
1. Get an idea
2. Seek advice
3. Structure the transactions or business in a tax effective manner
4. Take action
5. Get a better result through following the advice
Not only does good advice before taking action save you money, but it also saves time by doing the “right things, right” the first time around.
We have seen numerous examples on both sides of the equation. The best outcomes have always been achieved when advice has been obtained prior to entering into any transaction, as this has allowed us to map out alternatives so that we can find the option that best matches the business or investment outcomes sought while minimising the impact of tax.
It may not always feel like the quick option to get advice, but as the saying goes, an ounce of prevention is worth a pound of cure.
Managing your tax cash flows
Like any other expense, tax is an outgoing that can be managed in terms of both the amount to pay, and the timing of the payments.
The first key to having control of your tax liabilities is knowing how much is payable. This involves good planning, and good understanding of your financial position, earnings and expenses.
The second key is timing your tax payments. Knowing when you have to pay your tax is important to planning your cashflow, as this ensures you have the money available when it is needed and that it isn’t spent on other things that might end up leaving you short.
The following list outlines when the common tax payments are due for the remainder of the 2015 financial year. Using these dates, and some planning to determine how much is payable, controlling your tax cash flows can be made much simpler.
If you are unsure about what your upcoming liabilities are, then get in contact with us to arrange a review of your tax position and estimated payments.
21 August 2014 – July Instalment Activity Statement
25 August 2014 – June 2014 Business Activity Statement
21 September 2014 – August Instalment Activity Statement
21 October 2014 – Annual PAYG instalment
28 October 2014 – September PAYG instalment (individuals)
28 October 2014 – Superannuation contributions to be paid for employees
31 October 2014 – Tax returns due if one or more years is outstanding
21 November 2014 – October Instalment Activity Statement
25 November 2014 – September 2014 Business Activity Statement
21 December 2014 – November Instalment Activity Statement
28 January 2015 – Superannuation contributions to be paid for employees
21 February 2015 – January Instalment Activity Statement
28 February 2015 – December Business Activity Statement
28 February 2015 – Tax returns for new entities
21 March 2015 – February Instalment Activity Statement
31 March 2015 – Tax returns due for large entities
31 March 2015 – Tax returns due for individuals with > $20k payable
28 April 2015 – Superannuation contributions to be paid for employees
15 May 2015 – All other tax returns not due earlier
21 May 2015 – April Instalment Activity Statement
26 May 2015 – March Business Activity Statement
28 May 2015 – Fringe Benefits Tax Returns due for payment
21 June 2015 – May Instalment Activity Statement
30 June 2015 – Superannuation contributions to be made to claim deduction in 2015 financial year