Tax on living expenses

Did you know you're never taxed on the money you take out of your business for living expenses?

This applies even if your business is operated through a company. Therefore, it doesn't matter how much or how little you take out; it won't affect the tax you have to pay.

Some clients think if they haven't got much money left in the bank at the end of the year and have taken very little out for living costs, they won't have much tax to pay.

They often overlook substantial payments for equipment, which are not fully tax deductible costs.

When you buy equipment you're allowed to claim only a proportion of the cost each year (called depreciation), because the benefit the equipment bestows on your business is spread over several years.

 If you use an accounting program like Xero then you can keep an eye on your profit, and depending on your structure; eg company , trust or individual, you can calculate how much tax you'll have to pay.

 Tax penalties are extremely high. Therefore, it's a good idea to plan your finances well ahead to cater for your tax payments.