The careful application of withholding taxes is an often overlooked strategy by many families in business. Even worse, the simple lack of thought can result in banks and other financial institutions applying hefty withholding taxes on interest and dividends simply because something like a tax file number was not presented.
Further, the property sale can attract capital gains tax withholding if the tax strategy is not considered and managed upfront. While the CGT withholding is often perceived as an “automatic” response from the ATO – this is not the case. The ATO can take a significantly long period, resulting in your settlement proceeds being taken in escrow by the ATO.
From an international perspective, interest withholding, tax and dividend withholding can create opportunities. For many non-resident investors, the benefit of using banks and brokers to apply interest and dividend withholding tax can effectively become the final Australian tax payable, and the investor will not even need to lodge an Australian tax return.
Alternatively, for Australian families with global members, the remuneration of family members offshore through franked dividends and interest (with interest withholding tax) can reduce the Australian tax impost considerably compared to other ways of remitting funds (like a salary or trust distribution). And for these families controlling their global tax affairs: engaging tax advisors with a global footprint is essential so that tax opportunities – including interest withholding tax and dividend withholding tax are critically important.
As a business entity that employs staff, getting your PAYG Withholding tax done is essential for your human resources. Many of your team members will still work with a “cash in hand” payroll philosophy. So, getting the withholding tax calculations can result in team members incurring a nasty shock (and an HR nightmare) when they lodge their tax returns. You are not being appropriately recognised for what you pay them throughout the year. This is where the Westcourt managed payroll services are so essential for families in businesses like payroll and PAYG. Withholding Tax calculations becomes increasingly more complex.
As an Australian resident company, you can even incur withholding taxes on the insurance premiums paid to an offshore underwriter.
So, when it comes to looking at your tax affairs, it is crucial to get a quality firm that understands tax is so much more than income tax. And Westcourt is ideally placed to help you simplify, control and optimise your tax and business affairs. Our proven tax knowledge, global footprint and single pure focus on assisting families in business make us a natural choice for helping business families handle their affairs and optimise their governance and strategic tax positions.