This week we are sharing some real client examples that demonstrate why the right advice at the right time can make such a significant difference — not only in tax savings, but also in the time and effort involved in running a business.
The $100,000 CGT Bill That Didn’t Have to Happen
We recently reviewed a client’s property sale that resulted in approximately $100,000 in capital gains tax. Unfortunately, by the time we were engaged, many valuable tax-planning opportunities were no longer available.
Based on the client’s circumstances:
- If advice had been obtained before purchasing the property, we could have considered strategies from the beginning — including how the property was owned and used, and whether strategies such as the six-year absence rule could potentially apply. With the right planning, the CGT outcome could have been significantly reduced or potentially eliminated.
- If advice had been obtained before the sale, there were still opportunities to reduce the tax. We estimated that proactive planning could potentially have saved approximately $50,000, including considering the timing of the sale and other available strategies such as additional superannuation contributions.
The key lesson: do not wait until after you buy or sell a property to think about tax. Good tax planning happens before the transaction, while there are still options available.
From $1,900 Payable to a $3,300 Refund
A client earning both employment and sole trader income originally had approximately $1,900 in tax payable. After reviewing her return in detail, we identified a number of legitimate deductions that had been missed.
What we found:
- Motor vehicle expenses: The client regularly travelled for her business, but eligible car expenses had not previously been claimed.
- Home office expenses: We compared the available methods and helped her determine the more beneficial approach based on her actual circumstances.
- Previously overlooked expenses: A review of bank statements and credit card transactions uncovered a number of legitimate deductible expenses.
- Dedicated home office costs: Additional eligible expenses including cleaning and electricity costs had been overlooked.
- Travel and work-related expenses: Work-related parking, tolls, taxi, and Uber costs had not previously been claimed.
The result? Instead of paying $1,900, the client received a refund of approximately $3,300 — an overall improvement of around $5,200.
How We Also Saved a Client 5 Hours Every Week
Tax savings are not the only way a good accountant adds value. A new business client was spending around 5 hours every week managing bookkeeping and financial software. By reviewing, simplifying, and automating their accounting processes, we helped significantly reduce this workload — potentially saving over 250 hours a year on top of the tax savings we identified.
Is Your Term Deposit Actually Building Wealth?
Term deposits can provide certainty and security — but is your money actually growing? If you have $500,000 in a term deposit earning 4%, that is $20,000 of interest each year. However, the interest is generally taxable, and after tax and inflation, your real after-tax wealth may be growing very little.
This does not mean term deposits are the wrong choice. The question is: how much cash do you actually need in term deposits, and could part of your money be working harder for you elsewhere?
To review your tax position, property strategy, or investment structure, contact us on 1300 TAX SAV (1300 829 728) or book a consultation here.
Tax outcomes and the availability of strategies depend on individual circumstances and cannot be guaranteed. This is general information only.
