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Tax Effective Investing

Often investors are so focused on making money they worry about whether they have received 10% or 15% return on their portfolio. Of course the 15% sounds better!

If the 15% is taxed at 46.5%, you have actually made only 8% net. What if the 10% is taxed at 0% – you have still made 10%. Suddenly the 10% is sounding more attractive.

Investing inside a tax effective landscape is incredibly important to maximise the return on your investment. We understand the taxation implications of investment returns and have a successful track record of optimising this for clients.

Several tax effective investment strategies can be used to minimise tax. Getting the right mix of strategies is critical. We can explain the benefits of each strategy and recommend the most appropriate given your circumstances and goals.

Contributing additional funds to super through salary sacrifice is a way of both reducing the amount of tax you pay and increasing retirement savings. Contributions are made before tax, so they reduce your taxable income.

Gearing to invest can also be used to reduce your taxation liability. This is a relatively high risk strategy and requires conservative advice. Those who were highly geared at the start of the Global Financial Crisis were often caught out, and in many cases were financially ruined.

Timing of asset sales is important as good advice can be leveraged off to minimise Capital Gains Tax (CGT) liabilities.

Saving for specific events, such as your children’s education, can also be done in a tax effective manner. Some investment vehicles do not distribute personal income (i.e. will not add to your personal tax) and provide tax free payment(s) after 10 years or more.

Contact us today if you require tax effective investment advice.