Get Savvy at tax time

Written by Kodie Axelson

When wanting to borrow money we need to be making an income. Banks assess your borrowing capacity based on how much money is coming in and going out. Whatever is left over (minus some much hated buffers) is what you have left for repayments on any additional money your looking to borrow. This is how they calculate how much money they will lend you. So this leads to my next point. You need to make money to borrow money. I have heard “my accountant is really good and keeps my income down so I pay no tax” countless times, and I shake my head. Everyone has a strategy and I hope that people are using the right one. Looking like you make no money is not necessarily a strategy. I’m all for paying less tax but in order to grow you will require funding in some way, shape or form.

Don’t shoot yourself in the foot with a deficit on your financials or tax return. Be a smart cookie! A great way to reduce your taxable income is to use a noncash deduction like depreciation. When using depreciation as a strategy you can write off the value of the asset as a noncash deduction on your financials. A great way to reserve cashflow is to finance an asset such as a car, excavator, truck, trailer etc. and utilise depreciation to reduce your tax bill. It’s like a double whammy! Reduce your tax bill, not have to pay for the asset in full and using the interest as a tax deduction. It’s actually a triple whammy!! BOOM!!

Asset finance is a great way to access funds towards the purchase of any of the type of assets I noted above. The bank takes security over the asset so your business and your home etc, are all protected. It is a great way to access funding, increase cashflow and get a range of tax deductions because who loves saving money? Right?! There are many ways to reduce your tax so get crafty with your accountant.

Strategise now so you can leap into a new financial year with the best set of figures you could possibly have. Once 30th June hits your options are over. Don’t waste any time! Reconcile your accountants, book a meeting and get on top of what your options are. Knowledge is power! Because no one wants to wait another 12 months before they can access finance to grow their business.