What is tax planning?
Tax planning is arranging your financial affairs to keep your taxes to a minimum whilst still following the current laws.
As for how to reduce taxable income, a tax accountant will analyse your financial situation, both now and for the future. By taking into account the specifics of your situation and tax considerations, it is possible to create a tax-efficient plan that minimises how much tax you are obliged to pay.
These considerations can include the amount and timing of income within the financial year, the sources of income and the use of different types of assets, planning for expenditures, and saving for retirement.
Tax planning is an essential part of any wealth management or investment strategy. It is entirely legal when conducted within the intent of the law. Illegal steps taken to minimise tax are not tax planning, but tax avoidance.
At the end of the day, tax planning isn’t about trying to trick the government out of its tax revenue, but about individuals and organisations making use of the tax laws as they exist.
The ATO has many tax concessions to help the Australian businesses that are the engine of our economy, but many of these are hidden without the help of a tax advisor.