The Importance of Tax Planning

Most business owners think about tax once a year, usually in a panic around 30th June.

But here’s the thing: by the time you’re rushing to lodge your return, most of the opportunities to reduce your tax are already gone.

Real tax savings don’t happen at the end of the financial year. 

They happen when you plan ahead, make informed decisions throughout the year, and work with someone who understands the full picture.

If you’re running a small or medium business, or a high income earner, chances are you’re paying more tax than you need to. Not because you’re doing anything wrong, but because you’re reacting instead of planning.

With the right tax planning strategies and advice from a qualified tax accountant, you can legally reduce your tax burden, improve your cash flow, and make decisions that support your long-term goals.

Let’s break down what tax planning actually involves, and how it can make a big difference to your bottom line.

What Is Tax Planning And Why Does It Matter?

Tax planning is where you structure your finances and business decisions throughout the year to legally minimise the amount of tax you pay.

It’s not about finding loopholes or taking risky shortcuts. It’s about understanding the rules and using them to your advantage.

Tax planning is proactive. You’re thinking ahead, timing your income and expenses strategically, and making decisions that reduce your tax bill before it’s too late.

Tax time is reactive. You’re stuck with whatever happened during the year, and your only option is to report it and pay the bill.

Here’s why tax planning matters:

1. You avoid tax surprises: No more shock tax bills that drain your cash reserves.

2. You keep more money in the business: Every dollar saved on tax is a dollar you can reinvest in growth, staff, or equipment.

3. You make better decisions: When you understand the tax implications of a purchase, hire, or structural change, you can plan accordingly.

4. You stay compliant: A good taxation accountant helps you meet your ATO obligations on time.

Tax planning isn’t a luxury reserved for big companies. It’s a key part of running a successful business and it’s available to everyone (even individuals).

What Does a Tax Accountant (or Tax Consultant) Do?

A tax accountant does more than just lodge your return at the end of the year.

They look at your whole financial picture and help you make decisions that reduce tax, improve cash flow, and align with your business goals.

Here’s what a proactive tax accountant does:

1. Reviews your business structure.

Is a company, trust, sole trader setup, or partnership the best choice? Your business structure has a huge impact on how much tax you pay.

2. Times income and expenses.

Should you defer invoicing until July? Prepay expenses in June? These decisions can shift thousands of dollars in tax.

3. Manages super contributions.

Personal contributions can give you a tax deduction while building your retirement savings.

4. Advises on asset purchases.

Whether it’s the instant asset write-off or depreciation schedules, your tax consultant ensures you’re claiming everything you’re entitled to.

5. Helps you pay staff superannuation on time.

This is one a lot of accountants miss. Staff superannuation is only tax deductible if it’s lodged and paid on time.

6. Keeps you updated on tax law changes.

Tax rules change regularly. A good taxation accountant makes sure you’re always compliant and helps you take advantage of new opportunities.

7. Helps with business decisions.

From property to equipment to business expansion, your tax accountant shows you the tax-effective way to grow.

A good tax accountant helps you legally reduce tax and prepare for the year ahead.

Tax Planning Strategies for Small Businesses

Here’s a list of practical tax planning strategies that can save you real money. Because we believe tax advice should be available to everyone.

1. Review Your Business Structure

Your business structure determines how you’re taxed, and it’s not one-size-fits-all.

Sole traders pay tax at personal rates, which can hit 47% once you include Medicare. Companies pay a flat 25% (for base rate entities). Trusts offer flexibility for income distribution, which is helpful if you have a spouse, parents, or children who you can distribute income to.

If your business is growing and you’re still a sole trader, you might be overpaying tax. A tax accountant can review your setup and recommend changes to reduce your tax bill.

2. Prepay Expenses Before 30 June

If you prepay up to 12 months of certain business expenses before the end of the financial year, you can claim the full deduction immediately.

This works for things like:

• Insurance premiums
• Subscriptions and software
• Rent
• Interest on business loans
• Stationery and office supplies

Timing matters. If you know you’ll have a strong profit this year, prepaying expenses can reduce your taxable income now and free up cash flow later.

3. Maximise Super Contributions

Personal super contributions are one of the most tax-effective ways to reduce your taxable income.

If you’re a high income earner, contributing extra to super means you’re taxed at 15% (the super fund rate) instead of your marginal tax rate.

For example, if you’re paying 47% tax and contribute $20,000 to super, you could save over $6,000 in tax. Your tax accountant can calculate the right amount based on your situation.

4. Income Splitting Through Trusts

If you operate your business through a trust, you can distribute income to family members in lower tax brackets.

This has to be done correctly and the ATO watches for tax avoidance schemes. But when it’s legitimate, it can save you a significant amount of tax each year.

A tax accountant will help you understand what’s allowed and what crosses the line.

5. Use the Instant Asset Write-Off Properly

The instant asset write-off lets you claim an immediate deduction for eligible business assets, rather than depreciating them over several years.

This is valuable if you’re buying equipment, vehicles, or tools before 30 June and want to reduce your taxable income now.

But there are rules. The asset must be:

• Used or installed ready for use by 30 June
• Used for business purposes
• Under the threshold (which changes depending on current legislation)

A tax accountant ensures you’re claiming it correctly and maximises the benefit.

6. Purchase Vehicles Tax-Effectively

If you’re buying a work vehicle, the way you structure the purchase and claim it can make a huge difference.

Some options include:

• Novated leases
• Chattel mortgages
• Outright purchase with depreciation

Note: there may be FBT implications if you use the car for personal trips.

Each strategy has different tax implications. A good tax accountant will show you which option saves you the most based on your business structure and usage.

These are just a few examples. Every business is different, and the best tax planning strategies depend on your industry, structure, and goals. 

The Cost of Not Having a Tax Planning Strategy

Here’s what happens when you don’t plan ahead:

• You miss tax deductions. Whether it’s an expense you forgot about or a prepayment you could have made, missed deductions add up fast.
• You overpay tax. Without a tax planning strategy, you’re taxed on everything at the highest rate your structure allows. That’s means leaving money on the table unnecessarily.
• You face cash flow pressure. A high tax bill can drain your reserves and force you to stress about cashflow when you could be focused on running your business.
• You risk penalties. If you’re not keeping up with your ATO obligations or making mistakes on your tax return, you might be hit with penalties and interest charges.

A proactive taxation accountant helps you avoid all of this. They’ll help you reduce your tax burden, keep you compliant, and ensure you have the cash when you need it.

The price of good tax advice is almost always less than the tax savings it generates. And the peace of mind you get is priceless.

How to Choose the Right Tax Accountant

Not all tax accountants are created equal.

Here’s what to look for when choosing someone to help you with your tax planning:

1. Industry Experience

An accountant who understands your industry can give you specific, relevant tax advice.

If you’re a tradie, you need someone who understands job costing, vehicle deductions, and subcontractor arrangements. If you’re a doctor, you need someone who knows how to structure your practice, manage locum income, and help you with GST on services.

Generic advice won’t cut it. Find someone who works with businesses like yours.

2. A Proven Tax Planning Process

Ask how they approach tax planning. Do they only talk to you in June? Or do they check in throughout the year, review your numbers quarterly, and help you make decisions in real time?

The best tax accountants are proactive, not reactive.

3. Clear, Transparent Fees

You should know exactly what you’re paying for, and why.

If a tax accountant can’t explain their fees clearly or seems evasive about costs, walk away. Good advice is worth paying for, but you deserve transparency.

4. Year-Round Support

Tax planning isn’t a once-a-year event. Your business changes, tax laws change, and opportunities come up throughout the year.

Choose a tax accountant who’s available when you need them, not just during tax season.

Tax Planning: Red Flags to Avoid

Watch out for:

• Tax consultants or accountants who only contact you in June or July
• Overpromises – “I can reduce your tax bill by 50%!”
• Aggressive or questionable tax advice that sounds too good to be true
• Lack of qualifications or professional memberships

If something feels off, trust your instincts. It’s not worth the risk.

FAQs: Tax Planning Services

What’s the difference between tax planning and tax preparation?

Tax planning is proactive. You’re making decisions throughout the year to reduce tax before it’s owed. Tax preparation is reactive. You’re reporting what already happened and paying the bill.

Is tax planning legal?

Yes. Tax planning is about using the tax laws to your advantage in a legitimate way. It’s completely legal when done correctly with a qualified tax consultant. However, you need to be careful that your tax advice isn’t considered a Part IVA scheme (if the main reason you’re doing something is to obtain a tax benefit).

When should I start tax planning?

Ideally at the start of the financial year, so you have the full 12 months to implement strategies. But it’s never too late. Even end-of-year tax planning can save you money before the financial year ends.

Do you offer tax planning for individuals and businesses?

Yes we do! Tax planning works for both business owners and individuals. Whether you’re running a company, operating as a sole trader, or managing personal investments, a tax accountant can help.

Is tax planning worth the cost?

In almost every case, yes. The tax savings usually far outweigh the cost of the tax advice. Plus, you gain clarity, reduce stress, and avoid costly mistakes.

Do you offer tax planning services Australia-wide?

Absolutely! We’re based in Perth, but we have clients all over Australia. We’d be happy to assist you with your tax planning needs.

Ready To Get Started With Tax Planning?

Tax time doesn’t have to be stressful or confusing, and you don’t have to pay more tax than is legally required.

With the right tax planning strategies and support from an experienced tax accountant, you can legally minimise your taxes, improve your cash flow, and make smart decisions throughout the year.

The difference between a business that thrives and one that struggles often comes down to how well it manages its tax setup. We don’t want you to leave money on the table that you could use to grow your business or your retirement fund. 

If you’re ready to get started with tax planning, we can help. Contact us today to find out more about working together.