Taxes is said to be one of two things that are certain in life; the other one is death. As unfortunate as it may sound, we can’t really avoid the two. In taxes, however, we can be happy about two things. First is that we are helping our nation grow. We are part of the system that makes the government do its job. Second, there are ways to minimise the taxes we pay without incurring the ire of the ATO or Australian Taxation Office. This is called tax planning or to be more specific, efficient tax planning.
Your trusted Melbourne accountant is the best person to ask about tax planning but basically it means examining and planning your finances with the taxation process in mind. The best tax planning methods ensure that goals are still achieved with the least amount of taxes to pay. Be warned though, if you are not careful, you may fall into the trap of other taxation strategies, namely tax evasion and tax avoidance. Note that both can lead to penalties and even jail time.
Tax evasion is the worst in this category and no reputable big or small accounting firm in Melbourne is likely to advice a client to do that. If you fail to declare an income or claim deductions that you are not entitled to, it is considered tax evasion, a tax crime that at the least will put your investments at risk. The other taxation strategy to avoid is aptly called tax avoidance. Here you comply with the law but through an artificial scheme. The Australian government is bent on punishing taxpayers who use either or both contrived techniques.
Tax planning, on the other hand, is legal and encouraged by the ATO. To make sure you are adhering to correct practices, specifically “within the letter and spirit of the law”, enlist the help of a good Melbourne accountant. Freelancers, self-employed individuals and small business owners may find a small accounting firm in Melbourne better suited for their tax planning strategies and budget concerns over big accounting firms.
Finally, when tax planning, get yourself involved. If you feel that there are principles violated, talk to your accountant or inquire at the ATO. Be on the safe side regardless of tax benefit to gain.