When Should I Defer Income and Accelerate Deductions?
You should avoid this tax planning method if you suspect that you will fall into a higher tax bracket the following year. The two possible reasons that your tax rate can increase include;
- Increase in income, and
- Increase in taxation rate.
Avoid accelerating deductions when you feel that doing so will only lead to the loss of deductions value. On the other hand, if you foresee that your company income or profits will rise in the coming few years, you should balance a claim on large deductions and spread it over the years.
How can I delay income and accelerate deductions?
You are probably wondering how to do the timing that includes delaying incomes and accelerating deductions. The following are some of the methods you can apply when you are thinking of applying any techniques.
Delay collections: you can delay end-year billings to receive or collect payments after the fiscal year collapses.
Delay dividends: you can delay the dividend payment to your shareholders if there are any to the following fiscal year.
Delay capital gains: if, for instance, you are planning to sell an asset that has an appreciation value, then delaying its sale to the following year implies that you will have to declare the income the next year.
Accelerate payments: the tax basis taxpayers can pre-settle deductible business expenses like taxes, rent, insurance, and interests.
Accelerating the operating expenses, you should also consider accelerating the purchase of equipment or supplies.
Maximizing tax deductions and credits The above activities aim at reducing tax obligations. Carrying out professional accounting activities will significantly help you lower the taxes that your company will be obliged to pay.
*Disclaimer: There are varying moments or situations that either acceleration or delay might work. Therefore, you should consider thoroughly evaluating your business before making any accounting decision. The other solution to this dilemma is choosing to work with Paul Hype Page consulting services that will offer professional tax analyses service to help you make viable tax decisions and reduce your tax obligation*.
Anti-Tax Avoidance rules in Hong Kong
The legislative council of Hong Kong passed an Inland Revenue tax law that aimed at curbing tax avoidance within its territories. Thus, it implies that Hong Kong has laid down anti-avoidance rules (‘GAAR’) regarding which specific instructions can help in easing the amount of taxable income. Besides, there are various specific tax avoidance rules. Thus, you can only survive if you professionally conduct your accounting services
Like in any other country, taxation rules are equally rigid in Hong Kong, and breaking them will attract penalties. Further, understanding the dynamics and how to minimize the number of tax obligations is a complicated process that requires both experience and accounting skills.
Why Choose Paul Hype Page?
- You will work with professional accounting experts who will help you reduce your company tax obligations in Hong Kong.
- The team is experienced, and all your accounting activities will be guaranteed and filed in time and correctly to avoid penalties.
- We are familiar with all the Hong Kong tax obligations, dynamics, and the most recent updates that will help you professionally handle your business.