A little case study but a lot of money

Tax planning isn’t always about claiming as many deductions as you can. Sometimes, it’s better not to claim deductions.

The Problem

Big companies pay tax at 30% on its profit and when it pays dividends to its investors, it passes the 30% tax already paid onto its investors as a tax credit. But to receive the benefit of the 30% tax credit, investors must have at least $1 of taxable profit. If an investor has made a loss, the 30% tax credit is lost.

This situation rose for a client of ours who was a new investor. The client had incurred costs but had not yet received much income resulting in a small loss.

The Solution

We advised the client not to claim a deduction for costs of around $400 turning the loss into a small profit. As a result, the client was entitled to the tax credits of over $3,000.

The benefit

The net benefit to the client was around $3,000.

If you are looking for tax planning advice, let us help.


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