Financial Planning Lesson – # 2 – Tax Variation
Welcome to lesson 2 of the Financial Planning series.
This lesson is all about Tax Variation forms and the benefits of submitting one. A tax variation form is designed to allow the tax payer to submit and receive the money they would be owed at the end of the FY, throughout the year.
Lets look at an example and hopefully this will clear things up. Lets assume you have a property that creates a tax return for you of $5,000 that you’d normally submit after the end of the FY. So instead of getting this lump sum at the end of the year wouldn’t it be better to get it in every pay packet that you receive as part of your income. So if you get paid fortnightly then you’d get an extra $192 per fortnight in your pay. In fact what would really happen is that you’d pay $192/ft less in tax, so you’d see the tax rate on your payslip drop. So basically we’re getting the $5,000 tax return for you throughout the year.
Some clients prefer to have a nice cheque payment at the end of the FY but in reality it’s far better to have your money in your offset account or off your loan rather than sitting with the Government for the year. As such I’d highly recommend this as a strategy for cash flow and reducing debts.
We’re a Financial planning organisation based on the Gold Coast, so if there’s any questions at all about this strategy or how to submit a tax variation form then please give us a call, or drop in and say hi.