Tax planning for allied health professionals is an important part of cash flow management

By taking a proactive approach to taxes, an allied health professional can minimise their tax liability, maximise their deductions, and improve their cash flow.

Effective and timely tax planning can:

• Help improve cash flow by reducing the amount of taxes owed, allowing more money to be available for everyday expenses and business growth. Careful planning can help to maximise the deductions available to allied health professionals, reducing their taxable income and minimising their tax liability.
• Ensure you maintain favourable lodgement data with the ATO through timely lodgement of tax returns and BAS’s. The simple act of being able to lodge your tax returns later in the year, can allow the delayed payment of tax, allowing for effective use of those funds for business growth and loan reductions.
• Provide a clear picture of tax obligations and the time frames for payment. This can be used to ensure cashflow decisions are made reflecting these obligations. Ensuring tax commitments don’t coincide with large loan or capital expenditure payments helps ensure smoother cashflow in a business.
• Work to ensure that strategies favourable for tax purposes don’t impact on business operations or opportunities. Decisions should not be made solely based on tax benefit.
• Ensure you avoid costly penalties and interest charges for late payment or underpayment of taxes. Tax planning can reduce the stress associated with taxes by providing a clear understanding of tax obligations, deadlines, and opportunities for deductions and credits.

All business owners should also have an eye on their exit plan, and allied health practitioners are no different. Tax planning can help enhance retirement savings by reducing taxes owed on contributions to retirement accounts and maximising the benefits of these accounts.

However, despite all the benefits, tax planning cannot occur after the 1st of  July – it’s a bit late then. It’s not complementary for cash flow either if it is undertaken in the last week of June. Timing of tax planning is important in gaining maximum tax benefits and cashflow symmetry. 

We are now on the home stretch of the financial year; the end is in sight. It’s time for health professionals to consider their financial health. 

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