Its rare tax advice that encourages taxpayers to pre-pay tax. But it does happen.
Its a little known benefit that if a taxpayer pays a tax liability ahead of its due date by 14 days + the ATO pay interest. And its not a bad rate either. Was 5% (maybe 4-4.5% for 2015)
One client has just prepaid their 2015 tax. We will defer lodgement to May 2016. (You must use a tax agent to do this!!!). The cash paid reduces their assets so they get a slightly higher pension too.
The alternative was to invest the cash and pay tax on it. This defers the tax a whole year to a year they will have low income - so not tax.
Benefits of tax planning for a known tax liability
Its a little known benefit that if a taxpayer pays a tax liability ahead of its due date by 14 days + the ATO pay interest. And its not a bad rate either. Was 5% (maybe 4-4.5% for 2015)
One client has just prepaid their 2015 tax. We will defer lodgement to May 2016. (You must use a tax agent to do this!!!). The cash paid reduces their assets so they get a slightly higher pension too.
The alternative was to invest the cash and pay tax on it. This defers the tax a whole year to a year they will have low income - so not tax.
Benefits of tax planning for a known tax liability