page top

Tax Minimisation

Attention: open in a new window. Print

No-one likes paying tax but it is a part of life.  Minimising tax is the key.  When it comes to investing, there are many investment strategies that you can utilise to minimise the amount of tax you pay.

Enquire

Some investments are more tax-effective than others. Growth investments such as shares and property often receive more favourable tax treatment.

Contribute more to super

Salary sacrifice contributions to super can reduce the amount of tax you pay and build your retirement savings. The contribution is made prior to income tax being taken out of your wages. These contributions are taxed at a maximum of 15%* instead of your marginal tax rate which may be as high as 49%[1]. Remember though, that because of the concessional tax treatment there are limits on how much you can contribute; be careful not to exceed the limit, otherwise you could incur penalty tax.  Since July 2017 concessional contributions are limited to $25,000 per person per annum regardless of age.

Whilst your money is in super, the earnings are also taxed favourably at up to 15%, instead of your marginal tax rate.

Investment loans

Borrowing money to invest (gearing) may also be a good way to manage your tax. You can receive a tax deduction if the cost of borrowing exceeds the income generated by the investment.

If you have an investment loan you may be able to prepay the loan interest up to 12 months in advance and claim a tax deduction.

Selling assets

Timing the sale of assets can affect the amount of tax you pay. Try to avoid selling shares within the first 12 months of the purchase date. After this time only 50% of the growth in capital will be subject to capital gains tax.

An unused capital loss can be carried forward to a financial year when a capital gain applies therefore incurring less tax on that gain.

* A 30% contributions tax applies for very high income earners.


[1]Including the 2% Medicare levy and the 2% Temporary Budget Repair levy

If you would like advice on tax-effective investing, please contact Endeavour to arrange an appointment with a Bridges financial planner.

This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent. In referring members to Bridges, Endeavour Mutual Bank Ltd does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives. Examples are illustrative only and are subject to the assumptions and qualifications disclosed. Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837. Part of the IOOF group.

  You might be interested in: