Money in the bank
I just paid my tax.
Not for this year; last year.
I’ve formed the view that deferred payment is both a bittersweet experience and a wizard caper.
Depending on your situation, it could give you some fiscal wiggle room.
When I writhed in entrepreneurial slime, tax time always meant a crisis at Empire House.
I had neither the cash up front, nor the self discipline to sequester revenue during the year in a dedicated account.
It fell to my accountant to accelerate asset depreciation and cast various other spells to drag me over the line.
I’m sure he grew tired of my carping.
As I matured, and my business prospered, things became easier.
I stopped copping late payment fines from the tax office.
Last year, my tax bill was sufficiently relevant for my accountant to suggest I defer lodgement of my tax return.
‘Why?’ I asked.
‘To delay payment of your tax bill for almost a year,’ he replied.
That sounded interesting.
It seems accountants may lodge tax returns many months later than we mortals.
So he did, and the money I owed the tax office sat in my home loan account.
This effectively earned me a tax-free return of around 6.25% by reducing my home loan interest.
(I’m sure there are financial folk reading this who can explain it far better. So please do!)
The upshot was that I saved several hundred bucks.
Always a handy thing in nervous times.
Day of reckoning
Of course, the day eventually came that I had to cough up what I owed.
While this was always going to sting, I like to think it hurt the tax office slightly more than it did me.
I’d like to know if you do the deferred tax lodgement/payment thing.
If not, why not?
If yes, how has it worked out?
Do you think it smart?
Or is it merely a deck-chair shuffle; a frivolous forestalling of fate?
Alternatively, is it actually asking for trouble?
If you’d like to add your two cents (ideally this financial year) we’ll all benefit from the cumulative wisdom.
You can bank on it.