Individual tax planning is an essential part of tax preparation for your business. Having knowledge of tax planning is necessary for your tax concerns. It helps you save money, time and ensure your tax affairs are in order before the 30th June rollout. It may also help you reduce audit risk and cut tax on liability. So how can you arrange your tax affairs within the legal environment to cut on tax burden? Read on to find out more tips on tax saving and planning.
Tax Planning Tips
Tax planning tips are tax-saving strategies that help you minimize tax payable to the government. There are many tax planning tips such as;
Mortgage Interest Relief
Are you planning to buy a house, and are you eligible for a mortgage? Take advantage of the available mortgage relief interest to reduce your taxes. The law allows you Shs. 25,000 monthly relief on your taxable income. But, you only enjoy this on loans taken to buy, develop or refurbish your residential home. The government gives out this relief to allow many people to take up mortgages and build their homes.
Life Insurance Policies
The law allows you a tax relief of up to 15 percent of the premiums you pay on your life insurance. It covers up to Shs 5,000 per month or Shs 60,000 per year of your taxable income. The cover also includes an education plan which has a 10-year maturity plan. Besides, health policies for your spouse or child qualify under this policy.
Charitable Donation
When you donate to charitable organizations, you qualify for tax exemptions. But the organizations you are contributing to must have a valid tax exemption certificate. Or charitable projects approved by the finance minister.
Employee Share Ownership Schemes (ESOPs)
ESOP is a plan that enables or helps you have ownership of a company. You can achieve ownership by buying shares or stocks in the company. It allows you to take part in the decision-making and ownership of the company. KRA tax you earn from this arrangement at the beginning or end of the restricted stock scheme. However, the plan creates a tax exemption as capital gains for an increase in the value of shares.
Tax-Saving Tips
Tax saving tips are tax-efficient and tax-reducing strategies that help minimize tax payable to the government. There are many tax-saving investments such as;
Keep Track Record of Business Expenses
Most often, individuals may pay extra taxes because they lack cash purchase invoices or receipts. To cut on your tax payable, ensure you keep your purchase and sale receipts. Also, ensure these invoices have the correct ETR and PIN details.
Pay Tax When You Receive Payment
Most people find it hard to files for taxes when they receive money. To avoid late filings penalties and interests, always calculate your tax payable and submit your returns on time.
Register or Migrate to i-Tax Platforms
If you are still registered on the ITMS platform, it is time to migrate to the new i-Tax platform. When migrating, ensure to transfer all your tax details, including tax credits. Otherwise, you won’t benefit from the tax credits.
Know Your Income Tax Rates
Most taxpayers complain they do not know their tax rates. Ensure you know VAT, excise, business income, employment income rates, among others.
Conclusion
Keep in mind not all tax-saving tips and planning are equal. Pick those that suit your individual tax needs. Consider factors such as your cash flow, security, and returns. Remember, the goal is to minimize the tax burden while also leverage on the available opportunity. Contact us today; we will help you plan and save on your taxes.
