There's a fine line between tax strategy and tax avoidance
There's no way around the fact that every year, your business will have to deal with a significant tax burden. Between taxes on the revenue you bring in, the salaries on your payroll and everything else, you'll surely have a hefty bill to pay. Having said that, there are small strategic changes you can make at the margins to try to minimise the amount you owe.
In tax services, there's a fine line between what's strategic and what's illegal.
There are certainly ways to modify your tax strategy and avoid paying too much, but if you go too far, you might end up breaking federal laws and getting yourself in a world of trouble. What follows is a guide to approaching that fine line but not crossing it.
Reconsidering your income – and business structure
There are a few different strategies your business can try for being creative in tax services. One is to make shrewd changes to when you collect income – Smart Company advises that if you defer income to next year, for example, you can avoid paying taxes on it now, thus keeping your current burden low.
You may also be able to reconsider the structure of your business. For example, do you have a small outfit that's operating as a company? You might be able to change your tax obligations by reworking things and doing business as an individual proprietor. Strategies like this are legal and encouraged.
Staying away from tax avoidance schemes
With all of the above said, you still have to be careful not to go too far when it comes to implementing tax plans. The Australian Taxation Office (ATO) cautions that tax avoidance schemes are bad news. For example, if you incorrectly classify current revenues as capital you already own, that's not being creative – that's simply lying to the ATO.
It's not just unethical to get into these schemes. It's also bad business, as the penalties you're risking are far greater than the small amount you stand to gain. Talk to a tax accountant if you're unsure about the risks and rewards involved here.
Getting tax help when your business needs it
Modifying your tax plans can be a big boost to you financially, but sometimes you need to get help from chartered accountants before you can pull off such a feat. That's why it might be worthwhile to contact us at Wilson Porter and get invaluable advice on planning.
We are happy to lend insights on all sorts of taxation issues, ranging from GST to land tax and payroll tax. If you have any questions at all, just reach out. We'll be ready to help you.