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Tax Planning Industry

Why Create a Tax Planning Division?

  • Highly profitable clients expect tax planning or they leave.
  • It will increase your existing fees by 10%-50%.
  • 95% of taxpayers can legally reduce the amount of tax that they pay.
  • It increases client retention and generates new clients from word of mouth referrals.
  • No extra licensing or registrations are required.
  • Your current compliance tax knowledge is the base level foundation upon which tax planning expertise can be readily built
  • It creates the opportunity to differentiate yourself from your competitors.

Learn how to create a tax planning division in a day by joining one of our training courses.

What is Tax Planning?

Tax planning is the process used by individuals and businesses to structure their affairs to legally reduce their tax liability and make savings. This is achieved by using deductions, exemptions and structures.

According to the Australian Taxation Office "You have the right to arrange your financial affairs to keep your tax to a minimum – this is often referred to as tax planning, or tax-effective investing. Tax planning is legitimate when you do it within the letter and the spirit of the law".

Size of the Australian Tax Planning Market

For the year ended 30th June 2018 42,561 tax agents (RTA) and 19,550 tax (financial) advisers generated $330 million in revenue from tax planning. Tax planning accounted for 7.5% of the year's $4.4 billion tax services revenue.

Although 94% of accounting practices say they provide tax planning services, less than 1% of suburban accounting practices actually generate any revenue from the service. The data shows that over 90% of tax planning revenue is generated by the largest 100 accounting practices.

2018 tax planning revenue

Tax Planning Software

To date, Australia has lagged behind the US in the adoption and use of tax planning software. As a result, tax planning in Australia has generally been provided manually, on an adhoc basis, to only a few select clients (under 1% of taxpayers).

A Google search for 'Australian tax planning software' only brings up 3 businesses;

Over the last twenty years, every task, function and service in the average accounting practice has changed dramatically. The personal computer, and associated software, has brought enormous efficiencies in the preparation of financial statements, budgeting, and tax return preparation. Today, no accountants perform these tasks manually.  

Tax planning has also greatly benefited from computerisation. Tax planning software has now taken an ad hoc, manual, time consuming process to a new level of efficiency and effectiveness. In the US tax planning software has been available for over 15 years with the main suppliers being:

Who Can Benefit From Tax Planning?

It's simple - All taxpayers can benefit from tax planning and the savings that are created. Our research shows that 95% of taxpayers can legally reduce the amount of tax they pay.

Approximately 50% of Australian taxpayers use legal tax planning strategies to minimise their tax with the most popular strategies being negative gearing of residential properties (2.1 million taxpayers), and salary sacrificing super contributions (4 million taxpayers).

See our blog post on Australia's most expensive legal tax breaks

See Money Smart - Contributing Extra to Super

Achievable Tax Savings

The table below is a guide to the savings that are possible if 10%, 25%, 50%, or 100% savings are achieved.

tax savings

See case studies of tax planners saving clients' tax using the tax savings report.