What is the difference between Tax Planning and Tax Avoidance
Tax planning is the process of arranging one’s financial affairs in order to minimise tax liability within the bounds of the law. It involves looking at various tax-saving opportunities and making informed decisions about how to best take advantage of them. Tax planning may include things like investing in tax-advantaged accounts, taking deductions and credits, and structuring business and investment activities in ways that minimise taxes.
Tax avoidance, on the other hand, is the legal use of the tax regime to one’s own advantage to reduce the amount of tax that is payable by means that are within the law.
Tax evasion, on the other hand, is the illegal non-payment or underpayment of taxes by not reporting taxable income, claiming false deductions, or failing to pay taxes owed. It is a criminal offense.
The main difference between tax planning and tax avoidance is that the latter has negative connotations and is often associated with aggressive or unethical behavior, while the former is seen as a responsible and lawful way to minimise one’s tax liability.
At Amaze Accounting, all our advise, planning and strategies are within the boundaries of law. We provide our clients the best possible solution with integrity, in an ethical manner and what is permissible under the law, so that not only us but you can also have peace of mind in the long run.
How does amaze accounting help businesses with tax planning?
Identifying genuine tax savings opportunities
At Amaze Accounting we review your business’s financial situation and operations to identify tax deductions, credits, and other opportunities to optimise your tax liability. We may also be able to provide guidance on tax-advantaged investment and superannuation strategies.
Strategic tax planning
We can help your business to plan for future tax liability by forecasting income, assessing the impact of potential business decisions on taxes and suggesting strategies to minimise that impact.
Compliance
At Amaze Accounting we ensure that your business is in compliance with tax laws and regulations, and can help you navigate the process of filing taxes and paying taxes owed, including estimated taxes and other payments.
Representation
With our vast experience, in case of audit or any legal dispute, we can represent you effectively and communicate with the ATO and the ASIC to protect your best interests.
Knowledge of Updates and Changes
As members of the Professional Accounting bodies like CPA and CA, our team members are well-versed in the latest tax laws, regulations, and court decisions that may affect your business, and can provide guidance on how to respond to them.
Faq
Why is tax planning important?
Tax planning is important because it can help you to save money and make the most of your income and assets. By reducing your tax liability, you can have more disposable income and potentially invest more in your business or personal goals.
What are some common tax planning strategies?
Some common tax planning strategies include:
- Deferring income to a later financial year
- Maximizing deductions and tax credits
- Using tax-effective investment structures
- Salary sacrificing
Setting up a self-managed super fund (SMSF)
How do I know if my tax planning is legal?
To ensure that your tax planning is legal, it is important to seek advice from a qualified tax professional such as a registered tax agent or accountant. They can help you to understand the tax laws and regulations and ensure that your tax planning strategies comply with them.
When is the best time to do tax planning?
The best time to do tax planning is at the beginning of the financial year, as it allows you to make adjustments to your financial affairs before the end of the year. However, you can do tax planning throughout the year, such as when you have a significant change in circumstances such as starting a new business, purchasing an investment property or having a baby.
Can I get help with my tax planning?
Yes, you can get help with your tax planning from a registered tax agent or accountant. They can assist you in understanding your tax obligations, identifying tax-saving opportunities, and implementing tax planning strategies that are tailored to your specific circumstances.
How can I stay up to date on tax laws and regulations?
It is important to stay up to date on tax laws and regulations in order to make informed tax planning decisions. One way to stay informed is by regularly visiting the Australian Taxation Office (ATO) website for updates and information, and subscribing to tax-related publications. Also, consulting with a tax professional such as a registered tax agent or accountant can help you stay informed and make sure you are complying with the current regulations.
