Don’t leave it late too late for your tax

WITH only 13 weeks left of the financial year, astute taxpayers are starting to think about what can be done to reduce any tax payable with respect to the 2015/16 year.

Of course, the really astute taxpayers have been planning since July 1 but most of us leave it to the final quarter.

In reality, until we see what the Treasurer has in store for us in this year's Budget, any planning is subject to review but typically any major changes announced in the Budget will take effect from July 1 at the earliest.

Interestingly, the Australian Tax Office (ATO) explains tax planning on its website as: "You have the right to arrange your financial affairs to keep your tax to a minimum - this is often referred to as tax planning (which) is legitimate when you do it within the letter and the spirit of the law."

The ATO's focus is on tax avoidance schemes which (in their extreme forms) have been less successful as they are rarely within "the spirit of the law" and are therefore attacked by the ATO.

But, for most taxpayers, tax planning does not involve the use of complex or artificial tax avoidance schemes and can be successfully conducted "within the letter of the law."

Clearly, professional guidance in the process will be required if it is to be fully effective. Understanding the legal and practical possibilities and identifying the best combination for your situation should be a structured process.

This is also an appropriate time for businesses to review whether the structures established to operate the business and protect assets is the most appropriate in their circumstances.

As life moves on, the business structure may need to move with it. Again, expert guidance will be required.

Whether you are an employee or business, you need to consider many things.

Giving yourself sufficient time to formulate the plan and then implement it is crucial.

Once June 30 is gone, your opportunities are severely limited.

So add "Tax Planning" to your To Do list, with a due date of May 31, so you can keep as much of your hard-earned income as you can.