Taxation : strategies for financial planners

In this chapter, we look at the impact taxation has on financial planning. The way we do this is to first familiarise ourselves with some basic tax terminology. We then look at how the tax formula operates in application to some common investment scenarios for employees, investors and businesses. We consider how the various taxes work in these different scenarios and explore some typical issues that arise. The main (but not exclusive) focus is on federal taxes, such as income tax, fringe benefits tax and the goods and services tax. It is important to understand how tax can affect financial planning, including when tax planning becomes tax avoidance. It is also important to understand the role of the revenue authority, the Australian Tax Office" and its powers to investigate and audit.