Case Study | Small Business Saves $8,108 Tax
7/15/2019 4:21 PM
Objectives:
Peter is a small business owner who wants to save tax and reduce his child maintenance payments.
Facts:
- Peter’s business has a taxable income of $77,000 and is growing (taxable income is expected to double next year).
- Peter is divorced and pays child support of $12,000 per year.
Accountant’s Advice:
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Tax Strategy 2: Home office occupancy costs – business operated from home (seeing clients, administration, etc.).
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Tax Strategy 105: Rollover from sole trader to company – Move to company structure for asset protection purposes and to take advantage of the 27.5% company tax rate.
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Tax Strategy 123: General pool balance less than $30,000 – Write-off the $30,000 general pool balance.Tax Strategy 161 – Gift to clients.
Results
- Peter saves $8,108 tax (taxable income reduced by $23,501).
- Child support payments are reduced by $6,000 pa.
- Accountant receives tax planning fees of $1,700 (20% of the tax saved).
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