It’s one of my favourite parts of the working year and it’s here!It’s tax planning time at the IQ office and as ridiculous as I sound, I’m excited. I can’t tell you how much I love planning – being PROactive rather than reactive. In very basic terms a tax plan allows you to estimate your tax position at year end and then provide ways to improve this position. It’s a tax minimisation exercise that is legally allowed because you are planning for your tax position in advance and still have the time and ability to do something about it. Tax planning has the effect of:
- Reducing the amount of tax you pay
- Improving your lifestyle as a result of this
- Reviewing your investments and consequences of the last 9 months
- Tax effectively diversify your investments?
- Increase your cashflow for new investments?
Tax planning is specifically important for those who earn income through a discretionary trust. The changes over the last couple of years to trusts mean that trustees must determine which beneficiaries will be receiving a distribution for the 2013 year and further to this, how much they will be receiving. Without a tax plan, this will be a very difficult task and the outcome could be a poor result.
All clients of IQ Accountants will be receiving a letter inviting you to a tax planning appointment this week. At the very least, you will end up with a handful of ideas of how to minimise your taxation situation and an idea of what the year end return will bring. This means there will be no nasty surprises and you will be not only aware but in control of your tax position.