WiZDOM Accounting – Protecting Your Profits – 26th March 2025

In this webinar, you will learn how to safeguard your profits through proactive and legitimate tax planning strategies tailored for property investors and business owners.

Kamal Power from Wizdom Accounting provides a detailed walkthrough of essential techniques to reduce your tax burden before 30 June, from income deferral and prepaying expenses to structuring your investments for maximum efficiency. Whether you’re new to investing or managing multiple entities, this session outlines exactly what needs to be done — and when — to avoid costly mistakes and keep more of what you earn.

Legitimate Tax Planning vs. Tax Avoidance:
Kamal begins by clarifying the difference between tax planning and tax avoidance. Tax planning is the legal arrangement of your financial affairs to minimise tax, while tax avoidance involves exploiting loopholes against the intent of the law. The key is timing — strategies must be implemented before 30 June to be effective, not retrospectively.

The Tax Planning Process:
Tax planning is not a one-off task but an annual process that begins with accurate record-keeping throughout the year. From March onwards, Wizdom begins booking tax planning meetings to review profits across trusts and individuals. The goal is to estimate the year’s total income and apply strategies such as income deferral, super contributions, and strategic trust distributions to reduce taxable income legally.

Distributions and the Bucket Company:
A core strategy discussed is using a bucket company — a separate entity designed to receive trust distributions when individual beneficiaries are in higher tax brackets. This can reduce tax rates to 25–30%, compared to the 37–47% that high-income individuals might face. Kamal also covers the critical legal requirement to document trust distribution resolutions before 30 June, along with loan agreements where applicable.

Key Strategies to Reduce Tax:
Kamal outlines a range of effective strategies, including:

• Prepaying expenses (e.g., interest, rates, insurance) up to 12 months in advance
• Deferring income into the new financial year where possible
• Contributing to superannuation to take advantage of tax deductions, noting the importance of understanding caps and employer contributions
• Accrual vs. cash accounting to maximise timing advantages
• Using losses and capital gains effectively, ensuring assets are held for 12 months to qualify for the 50% CGT discount
• Claiming depreciation on bricks and mortar with a quantity surveyor’s report (e.g. BMT), and understanding that while depreciation is later added back, the deduction is still worthwhile

Real-Life Example:
A detailed case study of “John and Kate” shows how strategic tax planning reduced their taxable income from $50,000 to just $10,000. By prepaying interest and ordering a depreciation report, they saved over $15,000 in tax — all legally and proactively.

Common Mistakes and Warnings:
Kamal warns against last-minute planning and stresses that many strategies require lead time (e.g., setting up entities or moving funds). She also clarifies that development deals are taxed as business income, not capital gains, meaning the 50% CGT discount does not apply. Additionally, adult children must now physically receive trust distributions to qualify under ATO rules.

By the end of this session, you will understand how to:

• Book and prepare for a tax planning session
• Implement tax-saving strategies in time for 30 June
• Structure your entities for optimal tax and legal outcomes
• Avoid unnecessary tax through poor planning or inaction

This webinar equips you with practical steps to legally reduce tax, retain more profit, and future-proof your investment structures — with plenty of real-life context to back it up.

Action Items

• Arrange a tax planning meeting with the accounting team.
• Review the trust deed to ensure distributions can be made to associated entities.
• Prepare the necessary documentation (e.g. trust distribution resolutions, loan agreements) before June 30th.
• Investigate the potential benefits of moving a positively geared asset from individual ownership to a trust structure.
• Seek advice from the accounting team on the best approach for setting up a trust and transferring an investment property into it.