Every week we hear and read about the impact on traditional compliance work. The best way firms can address this perceived loss of income, is by making sure we highlight and reinforce what we do well for our clients. Tax planning is a great example of a simple process that certainly does this.
Tax Planning is a very specialised and highly skilled domain, so why don’t firms do more tax planning for their clients? Recently I spoke to a firm that have started to use a cloud based program called Tax Strategist www.taxstrategist.com.au which has revolutionised their workflow. Not only has it taken away the pain of Excel worksheets, it has resulted in an efficient and process-driven workflow, which has in turn driven up their fees in relation to their tax planning period.
How is your practice currently doing your tax planning? Over the phone, back of the envelope, on a whiteboard, no notes, client doesn’t perceive value? This particular practice that has been using Tax Strategist produces a dynamic visual report. They have each tax planning client come into their boardroom and show it on their big screen. Clients can see in real-time the impact on their tax position by carrying out various strategies.
Here is an example of a possible tax planning strategy that could be developed into an engaging visual presentation for a client:
In 2016, the tax rate for a company that wasn’t an SBE was 30%. Let’s say for example in 2016, they weren’t an SBE because their turnover was $5 million. In 2017, it is proposed that the turnover test for SBE’s will increase to $10 million with the tax rate dropping to 27.5%.
If you had done some tax planning prior to 30/06/2016 with the client and they had agreed that, from a cashflow perspective, they could afford to defer income of $500k and invoice on 1/7/2016 rather than in June, you could easily show that client that you had helped them save $7,500 in tax.
So here is the challenge. How many times in the last five years have you quantified for the client the tax savings from the advice you provide? Why not produce a simple two-page report which clearly demonstrates how much tax the client has saved all in only a few minutes!! As an industry, we need to get better at selling what we do and this is a simple example. Tax planning is a core service that we should be offering to more clients.
Another by-product of tax planning is developing an action plan and including it with the tax planning report, listing all the actions the client needs to take by a certain point in time. E.g. super contributions, pre paying interest etc. This way there can never be any confusion about what the client needs to do to achieve the tax benefits. This also creates an environment of accountability going forward in the relationship.
I encourage each and every practice that offer taxation services to look at tax planning in the cloud as a key service offering that can assist in not only your day to day role, but with helping you move from tax compliance to tax advisory.
Tax Strategist is just one of the new, innovative applications you’ll see at ATSA 2016 in Melbourne on October 24-25. Click here to find out more
Mark Holton | SmithInk