When going to war Generals will carefully analyse every aspect of their enemy so as to ensure a swift victory with as little casualties as possible. Everything from the size of them enemy, their location and the timing and landing point will be carefully planned. Even your favourite sports team will go into every match with a well thought out plan – yes even when the score blows out to an embarrassing level; there was still a plan in place.
Dealing with your annual tax liability is not unlike going to war, albeit significantly less hazardous to ones life. A complete analysis of the enemy, in this analogy the Australian Taxation Office, must be completed and timings of your attack must be carefully planned.
What we’re talking about here is having a plan of attack – a tax plan of attack.
Discussions at the weekend BBQ or in the crib room may reveal strategies to minimize annual tax liabilities, however blindly following such recommendations can lead to catastrophic consequences in your business. What works in theory can often not work when put into practice.
Tax planning strategies need to be a custom fit for your business. They need to be tested against the parameters within which your business operates. Consideration not only needs to be given to the resultant tax impact but also to the overall cash flow impact on your operations.
The landing at ANZAC cove on 25 April 1915 – it was the result of a poorly planned attack on the enemy. Don’t let your yearly assault on the tax office end in a similarly costly result.