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Tax is a huge financial risk which may become burdensome if not addressed with caution. Tax risk is the risk of non-compliance which can be mitigated by adequate tax planning. Have you ever thought of having a tax team for your business?
Tax planning is an exercise undertaken to minimise a tax liability through the best use of all available allowances, deduction, exclusions, exemptions etc. to reduce taxable income and/or capital gains. Tax planning may pose to be an opportunity to increase taxable income in a period before the expiration of a tax loss. The ultimate goal of tax planning is to arrange your financial affairs so as to minimise your taxes.
There are various ways to reduce your taxes and include reducing your income or increasing your deductions. For example, you can reduce your income by holding on to an asset which if disposed in the current tax year would give rise to a taxable recoupment and dispose of it in a subsequent tax year. You can elect special initial allowance (SIA) and accelerated wear and tear in cases where you are arriving at a taxable income instead of an adjusted tax loss. You can also dispose of assets that will result in a scrapping allowance.
In instances where a trader has an assessed loss which is approaching expiry he must not accelerate deduction of his expenses. He should elect wear and tear as opposed to SIA. He can also opt to defer claiming expenditure and claim it in subsequent years. However, if deferring the claim of expenditure results in the expenditure being lost then the trader should claim the expenditure. You can also maximise income by disposing of unusable assets which will give rise to a taxable recoupment.
In conclusion, stay up to date with tax changes and take advantage of deductions, allowances, credits etc. For example, you may now claim a capital allowance on your computer software with effect form 1 January 2015. These are allowances that definitely reduce your taxable income.
