Rahul Lachman from Marsdens joins us to give us some advice on Commercial Law
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Real estate expert Shaun Pereira joins us to discuss investing in property in the Macarthur region.
I recently met with a client at my office in Campbelltown who had been running they’re business for just over 2 years. Their number 1 priority was to minimise taxation as much as possible. While there are many legal strategies to reduce payable tax, this in my opinion should never be the number one priority. When running a business in the early stages improving cash flow and increasing profits should always come before tax considerations.
I let the client know that I understood that tax minimisation was his top priority and there were ways to achieve this, but then I asked what his goals were. The client reiterated that they wanted to own an investment property and ultimately wanted to be financially stable over the next 10 years.
I explained that an all-out tax minimisation strategy of increasing investment in the business and lowering taxable income does not fit with the growth of an investment portfolio. Ultimately lending is usually required to boost your investment portfolio and banks would not lend to a business particularly in this current environment that they were not sure was going to be able to repay the loan. The client understood and we discussed and agreed upon the best way to strike a balance between future goals and current priorities.
I recently engaged a client who was in debt with the Australian Taxation Office. The advice provided by their previous accountant was to take out a mortgage against their home to pay off the entire existing tax debt. The client trusting their former accountant followed the advise and took out a loan against their home to finalise the debt. The problem was the client was now starting to go backwards again with their taxation debt and contacted me to obtain a second opinion.
When I reviewed the client situation the previous accountant had not investigated other alternatives nor had approached the tax office regarding what arrangements could be organised regarding a payment plan for the debt. The loan the client had obtained was also not the best product on the market due to the rushed nature of the transaction. To compound the frustration the previous accountant had charged for his time to provide this advice.
Following my review the client and I put in place cash flow management tools as well as organised a payment arrangement with the tax office with the new taxation debt that was starting to arise. The client has also since refinanced the loan to a better loan product through a trusted referral partner that will also save the client money.
If you have a tax debt or feel you are going backwards with the tax office or with your current accountant don’t hesitate to get in touch with us to discuss how you can start moving forward.