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Tax Planning Process

What is Tax Planning?

Tax planning is not the same as tax compliance.

With tax compliance, as accountants you try to maximise your client’s refunds or savings by claiming valid deductions that they have evidence for whilst ensuring ATO compliance obligations are met. Compliance is a reactive service.
In contrast, tax planning is an advanced service that goes well beyond this and investigates what strategies can be implemented and used to make structured tax savings. Tax planning is a proactive service.

Who Can Benefit From Tax Planning?

It's simple - All taxpayers can benefit from tax planning and the savings that are created.

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

7 Step Tax Planning Process

  1. Educate clients - This involves using the TaxFitness newsletter (and other tools) to educate clients on their personal tax situation, tax planning in general and their opportunity to save tax.

  2. Sell service to client - This is the process used to sell tax planning services to clients.

  3. Information gathering - For effective tax planning essential client information is collected:

    The group members (i.e. all the individuals and entities that make up the client’s overall structure),
    Group members’ current year income and expenses, 
    Group members’ assets and liabilities.

  4. Tax strategies database - This explains how the 250 different tax strategies actually work: 
    1. What the tax strategy is,
    2. How the tax strategy works,
    3. When to use the tax strategy,
    4. Average tax deductions created by the strategy,
    5. The strategy implementation process.

  5. Selecting tax strategies - This is a two-part process. Firstly, your unique circumstances (identified through step 1) are considered in conjunction with the unique attributes of each available tax strategy. We use a tax strategies database with over 250 strategies. Then secondly, we use tax planning software and our expertise to select up to 10 optimal tax strategies for you.

  6. Tax savings report - Special tax planning software is then used to produce a report that details the tax savings generated from implementing the selected tax strategies, and the step-by-step process to legally and effectively implement each strategy (including the cost).

  7. Client discussion and implementation - We then discuss the tax savings report and implementation process with you so you fully understand the options. We can then also implement the strategies for you if you choose to proceed.