2010 Tax Returns - The Do's and Don'ts

2010 Tax Returns - The Do's and Don'ts

Are you?	- A taxpayer?
At a glance:	- There are a range of tax saving strategies that may be available to you this tax season.
You should:	- Be aware of all the legal and illegal tax planning strategies. - Contact us if you require any clarification or advice.

1.	With tax time almost here, taxpayers are reminded that tax planning strategies need to be within the spirit of the law or they may receive harsh penalties.
2.	One strategy that may, depending on your circumstances, be avaliable to lower your tax liability is to bring forward deductions by: - Prepaying any interest on a deductible loan; - Writing off bad debts; - Ensuring all superannuation contributions are paid; - Paying membership subscriptions before the end of the tax year; - Meeting bonus and commission obligations; and - Committing to paying director's fees and bonuses before year end.
3.	Another strategy is to ensure trading stock is valued using the most advantageous method and all stock is carefully reviewed so that any obsolete or damaged stock can be written off.
4.	Taxpayers may also consider holding capital gains assets for more than 12 months before selling to gain access to the capital gains tax discount. However, taxpayers must be mindful of entering into an agreement to sell an asset before the 12 month period, and then carrying out the transaction after, as this may trigger the anti avoidance provisions.
5.	One strategy which taxpayers are warned not to engage in is wash sale arrangements whereby assets (such as listed securities) that are currently in a capital loss position are sold and bought back a short while later simply to realise the capital loss.