Leave all of the tricks for Halloween, we only want the treats here.
Here are the best tricks (or should we say treats?) to avoid that big surprise tax bill this financial year.
PAYG Instalments
This is where you start to put money towards, and pay off the expected tax debt that you would have at the end of the current tax year. Paying it off in increments makes it a lot more manageable. It’s also a lot less likely that you will receive a big terrifying tax bill come June.
These are lodged with the ATO via Business Activity Statements (BAS), or Instalment Activity Statements if you’re not registered for GST.
PAYG Withholding
Pay as you go is a withholding tax. This is the responsibility of the employer [you] to withhold a portion of your employee’s wage which will be sent to the ATO each BAS.
Other Income
Be sure to keep track of your other income streams. You may be checking the boxes off and paying your tax throughout the year to the ATO from your business, however if your investments are doing well or you have other business ventures, then it’s important to make sure that they’re paying their dues as well. You’re still required to pay tax on these other secondary and tertiary income streams. They can also tend to add up. Keep on top of your tax and continue to pay it off across the year from all your streams to avoid being caught out at the end of June.
Create a strategy
AKA, Make sure you book in for a tax planning session come March / April each year. This will help to give you an idea of how you are travelling paying off your tax requirements. You can also work with your accountant to create a strategy to get as much of that back as possible.
Payroll Tax
It’s so important to keep an eye on your wages and super payments.
The thresholds and tax rates vary from state to state. You can check out a guide here.
We have quite a few of our favourite tips and tricks to avoid a big surprise tax bill. Unfortunately, there is no way to avoid paying tax. There’s strategic ways we can minimise it (our area of expertise), but there should be no reason you should be struck with a big surprise tax bill. Your tax is something that needs to be tracked and an eye kept on it. If your accountant isn’t doing this, then you may have to.
You can read about why it’s so important to put these measures into place by reading our real life scary story of a client that received a bit of a shock to the system with this surprise tax bill. Read about it here.
If you’ve already been hit with an out of the blue tax bill, then there are ways to make it easier to pay it off. The ATO are there to help and have some more information on it that you can access here.