[AU] How to use the Tax Planning binder


The Tax Planning binder is designed to flow through the different sections to result in a final report that can be used to compare strategies and tax estimates. Work through the sections in the following order: 


Creating a Binder

When creating the binder it is important to select the correct End Date. This value can also be edited in Binder Details in the Settings & Tools menu if necessary.



The End date is used to determine at what date you are entering actuals to, as opposed to estimated values. Changing this date changes the number of columns available for estimates.



If you want to have the ledger data available to reference, be sure to connect your binder to your client's accounting file in the binder creation process. For more information on how to create and set up a binder, see the knowledge article: How to create a binder. You are now ready to start work on your Index.




Estimates

The Worksheets section of the Index allows you to add as many or as little templates as you need to help estimate the projected profit/loss for the year ending 30 June. Simply click on the Accept button to add it to your binder. You can also click on the + Add Record button to search for other templates available.



Choosing the Estimate Method


There are two methods available to extrapolate your client's data to year end:

  • Cashflow Estimate - this method is used for manually entering estimates into the various line items, based on what you know about the client's situation. It is particularly useful for those clients that have seasonal businesses.
  • Proportional Estimate - this method takes your actual figures and extrapolates those amounts out until 30 June based on a projection factor, which is determined by the number of months remaining in the year. This is the quickest and easiest method to use.



Hint: You are able to copy ledger balances and insert them into the 'Actuals' column. This way your actual figures will update when you refresh the trial balance. Simply right click on the relevant balance in the Index (in either Excel or the web) and select Copy Ledger Formula. Then paste this formula into the relevant cell of your worksheet.



Year-end templates are also available in the binder (by clicking on the + Add Record button) to help you estimate the profit/loss as accurately as possible. For example, the 'H11 Chattel Mortgage Schedule' worksheet can be used to calculate the interest expense on current loans for the year, and then later can be linked to or inserted into a year-end binder if required.



Tax Reconciliation

If your tax planning involves a company, after entering all the income and expenditure projections, Accept the TP18 Tax Reconciliation worksheet in the Taxation section of the Index. 



This worksheet uses information from the 'TP07 Estimated Business Gross Profit', 'TP14 Estimated Primary Production Income' and 'TP12 Estimated Business Expenses' worksheets to determine the estimated profit or loss of the business.



Note: Do not include non-business income such as interest, dividends, rent, distributions from partnerships and trusts or capital gains. Enter those items on the separate worksheets provided, or directly into the 'Original Projected Taxable Income' worksheet (see below).


You can then enter any reconciliation items that you know are going to impact the business' taxable profit or loss, including prior and current year provisions and prepayments. Any non-deductible expenses that were entered into the 'TP12 Estimated Business Expenses' worksheet will automatically flow through to the reconciliation.


Note: A prior period section has now been added to all relevant worksheets, which will prepopulate when rolling over to Tax Planning 2025 and beyond. 



Original Projected Tax Estimate

Now that you have a projected taxable profit or loss, this amount will flow through to the TP31 Original Projected Taxable Income worksheet.



In this sheet you are able to choose the number of entities in your group. Click the Display button for the worksheet to update the number of columns required. Name all the entities in the Estimated income for: row and select the entity type from the dropdown list.



From here, you can then enter any other values you have available for all entities, such as salaries, dividends and distributions. You are able to simplify your view by clicking on the Hide Inactive Rows button and by using the expand (+) and collapse (-) buttons to the left of each section.


In the Tax Estimates section you are able to add any tax offsets, as well as any PAYGI or PAYGW payments made during the year.



After completing all relevant line items, the Tax Estimates section will give you an estimated net tax liability for each entity, as well as a total.



You are then able to use the strategy worksheets to determine the best methods for reducing the tax liability.



Tax Calculations with Recommended Strategies

To begin looking at tax reduction scenarios, you will need to import the tax strategy worksheets into the Tax Calculations section on the Index.


Note: It is mandatory to give each strategy a title, so they can be distinguished from one another in the final report.



Simple Tax Strategies Worksheet


The TP01 Simple Tax Strategies worksheet allows you to choose from common tax planning strategies by using the dropdown list. There is also space to manually enter your own.



You can enter as many strategies in combination as you like. As before, use the Hide Inactive Rows and expand and collapse buttons to optimise your view. The total tax saving across all entities is shown in the Tax Planning Summary section on the same worksheet.



Note: If more than one strategy is selected, the final tax saving will be a combination of all scenarios chosen. To compare one simple strategy against another, add a separate simple worksheet and compare the totals.


Complex Tax Strategies Worksheet


The TP02 Complex Tax Strategies worksheet is a direct copy of the Original Projected Tax Income worksheet but allows you to alter figures. You can add as many complex worksheets as required for comparison. Simply change any amounts that are relevant to your strategy and the tax will be recalculated. All cells changed will be shown in bold with a white background.




Tax Planning Report

To view the outcome of the strategies in a simplified manner that can be used to present to clients, navigate to the Reports section of the Index and go to the Tax Planning Report with Strategies worksheet. From here you can select the income strategy to display. If your strategies are not appearing in the dropdown, click on the Refresh Summary button.


Note: The figures shown in the report are the adjusted amounts relevant to the strategy chosen, not the original figures.



The report will outline all the basic information, as well as a summary showing the tax saved. To view the different strategies, simply select a different one from the dropdown list and click on the Refresh Summary button.



There are also Financial Statements and a Cover Page available in the Reports section for you to complete your tax planning reports. 



Checklist

Please note that there is a binder checklist that can be used to ensure that you have completed everything relevant to your job. This can be inserted in the Overview section of the Index.



The checklist items can then be accessed by clicking on the checklist icon next to the record.




Templates Available in the Tax Planning Binder

ReferenceNameSectionRecommendation

Tax Planning Checklist - Business ClientsOverview
Recommended
TR_1Tax RatesIncome TaxMandatory
TP31Original Projected Taxable IncomeIncome TaxMandatory
TP18Tax Reconciliation Business IncomeIncome TaxRecommended
TP01Simple Tax StrategiesTax CalculationsRecommended
TP02Complex Tax StrategiesTax CalculationsRecommended
TP24Tax Planning Report with StrategiesReportsMandatory
TP27Financial Statement Cover SheetReportsOptional
TP25Financial Statement NPPReportsOptional
TP26Financial Statement PPReports
C05Franking AccountsWorksheetsOptional
TP06Capital Gains TaxWorksheets
TP07Estimated Business Gross ProfitWorksheetsOptional
TP08Estimated Rental Properties IncomeWorksheetsOptional
TP09Estimated Rental Property DepreciationWorksheets
TP10Interest IncomeWorksheetsOptional
TP11Estimated Other IncomeWorksheetsOptional
TP12Estimated Business ExpensesWorksheetsOptional
TP13Estimated Interest ExpenseWorksheetsOptional
TP14Estimated Primary Production IncomeWorksheets
TP15Estimated Livestock Trading AccountWorksheets
TP16Forced Sale of LivestockWorksheets
TP17Deferred IncomeWorksheets
TP19LossesWorksheetsOptional
TP20Division 7AWorksheets
TP21Borrowing CostsWorksheets
TP22Chattel Mortgage Schedule
Worksheets

TP23Hire Purchase Schedule
Worksheets
TP28Trust Distribution SummaryWorksheetsOptional
TP29Dividends Paid SummaryWorksheets
TP30Total Super Balance and Transfer BalanceWorksheets


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