Many of us have our tax returns prepared through a registered tax agent. As a result, the due date for your return to be lodged can often be pushed back well into the following financial year. Agents get concessions that allow you to lodge your returns from March through to June of the following year. Consequently, a lot of business owners have to wait, and just like it was when you were at school, you try to get everything done at the due date in a mad panic.
There are however benefits to avoiding this approach, and attempting to have your return done in the first half of the year.
Preparing your tax return in the first half of the year doesn’t mean you have to lodge it in the first half of the year. Seeing your accountant early may bring you some bad news (the dreaded tax bill), but at least you know where you stand, and you can start putting money aside for when it is lodged later in the year. The flip side of this is, maybe you are entitled to a refund that you weren’t prepared for, so now you can lodge your return early, and get access to those funds within a few weeks.
Possibly reducing your instalments
When you are prepaying tax liabilities, often you are basing this on prior year tax results. If you are entitled to a tax refund based on overpaying, these instalments can be reduced, meaning more cashflow for you in your business over the course of the next year. Alternatively, if your instalments are going to increase as a result of your increased tax liability, holding off lodging until later in the year will keep your instalments low in the short term, and understanding what they will move to will allow you time to put money aside, to stay in line with your future tax liabilities.
If you want to know more about the benefits of preparing your tax return early, contact the team at Carbon Accounting. Arrange a complimentary 30 minute consultation by calling (08) 9446 8588.