Help! I’m Facing A Big Tax Bill!
I regularly receive phone calls like this, from clients and people who legitimately want to reduce their tax liability.
They may be small business people who have had a particularly good year or investors who have just sold an asset for a large profit or others who have come across some luck.
It’s my job as an accountant and tax expert to provide guidance, assurance and advice on such matters.
To start with, there are a few things I would try to determine:
1. Is the tax bill due to results for this financial year?
If so, there is time to confirm any pending liability and to initiate some tax planning strategies prior to the end of the financial year.
If the bill is for prior financial years we would check the raised amount to see if it’s correct. A second opinion (and clear explanation) is helpful.
2. Is the tax bill due to realised Capital Gains or due to trading results?
There are a number of discounts and concessions such as rollovers which can significantly reduce tax on realised Capital Gains. Rules apply – so you should try to see if any of these apply to you.
If the tax bill is due to better than expected trading results there may be options to reduce the liability by:
- Deferring income to a subsequent financial year
- Writing off expenses earlier eg. depreciation or writing off doubtful debts
- Splitting income with a lower tax payer.
3. Are there grounds to negotiate with the Tax Office to reduce the liability?
This might be the case for remission of penalties and less so, for remission of interest.
4. Can PAYG tax be reduced?
If the Tax Office has raised a debt for an estimated instalment of tax (PAYG), can that instalment be varied downward for any reason?
If none of the above applies, then we would firstly congratulate you on your business results (remember, there is only tax liable if you’ve made money) and then work out your options for the repayment of the monies.
There’s always help from an experienced and trusted accountant available to guide you.
Leave me a comment if you need some help (or a second pair of eyes).