Instead of being reactive and providing answers to your clients’ questions (often verbally), it’s time to become proactive and make tax planning part of your standard service offering. It can be done in a structured manner, and provide your client with a simple report and action plan.
The issue for practices that have previously been proactive and provided tax planning on a regular basis is the cumbersome spreadsheets used to do it – it takes time and effort to update and maintain, a cost to the firm.
TaxStrategist is an online tax planning tool that has been built to overcome all of these issues.
Here is a simple tax plan that could be developed into an engaging visual presentation for a client:
- 2016 company tax rate for companies greater than $2 million turnover: 30%
- Company’s turnover was $7 million
- 2016 budget – from 1/7/16, the turnover test for an SBE is increasing to $10 million and the tax rate decreasing to 27.5% (not yet legislated)
Possible tax planning advice
- Client can afford to defer income of $600,000 – the business will invoice on 1/7/16
- Net tax saving on the $600,000 of $15,000 due to the change in tax rate
- Deferred payment of the tax on the $600,000, now totalling $165,000 for a further 12 months
- Further cash flow benefit of reduced PAYG instalments for the following couple of years
The questions I pose: you may have advised your clients to implement the following strategy but did you a) quantify the tax savings from the advice you provided; and b) provide them with a report and action plan to detail the strategy, together with any other strategies you have recommended? If not, did you charge the client appropriately for the verbal advice and, conversely, if you had provided them with a written report would you have priced differently? The added benefit of an action plan and report is twofold: the client understands that if they want to achieve the tax benefits they need to implement the strategies. For your team, they have a comparative point of what the final tax position may look like. It is very easy for them to go back to the client with a simple explanation if the outcome is materially different.
If your firm is looking at ‘where do I go in the advisory space’, why not start by doing something that you are already comfortable doing. Tax planning is your easy kick-off advisory piece that we should be offering to more clients. TaxStrategist is the only tax planning tool available in Australia. Take a trial at www.taxstrategist.com.au or alternatively call Jane on 0417 987 838 for a demo to your team.
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