In the past couple of weeks most of the tax discussion has been dominated by the raft of stimulus measures that are being released, seemingly daily, by the Federal and State Governments.
Staying on top of the various stimulus measures and maximising the available benefits for your business and your employees is critical. The immediate challenges of the COVID-19 business crisis has meant a somewhat reactionary approach is necessary (practically nobody saw this coming) and the stimulus measures have been carefully targeted by the Government to help business:
But… you should start “planning ahead” now
Looking beyond the here and now, you need to be planning for a return to normal business, although “normal” may be different for some time or indeed forever. It is important to reimagine what the next normal will look like:
The key to any planning is tax forecasting
Business forecasting is critical when confronting uncertainty, as it gives you a clear base line to assess alternative outcomes. Most businesses should be currently reviewing financial assumptions and producing new forecasts. It is necessarily an ongoing process and your tax forecasts should work in parallel.
A good tax forecast model is more than multiplying accounting profit by 30% and assuming four equal tax instalments. Perhaps this is a reasonable approximate, but it does not tell you the story that is important to your business.
A good tax forecast model forecasts the key risks and tax attributes of a business. It should forecast and assess the following:
Appropriate forecasting of key tax attributes and risks enables you to understand what drives the numbers and identify what the trigger points are for key decision making.
Such a strategic approach not only manages tax risk, it ensures that when the right opportunities present themselves it is more likely that you are able to capitalise on them to drive business value through tax outcomes, and be ready for a post COVID-19 world