Building wealth can be achieved in maximizing the return of your capital and legally minimizing the level of tax must pay.
Bamboo Wealth advisers can assist you with strategies that allow you to grow your investment capital in a tax effective way and choose appropriate products that meet your individual needs and circumstances.
Superannuation is one of the mostly used tax effective investment vehicle many Australian use each year. There are many other ways that we can structure and develop strategies to ensure you can accumulate the required level of income for your retirement.
The Government also provides many incentives for individuals and business to reduce their tax liability and provide more for their retirement.
Tax minimization - Some key points to consider
Nearly all investment decisions and the associated returns from investments are affected by taxation. A financial planner’s aim should be to maximise the after tax return of a particular investment or strategy not merely to minimise the tax payable. Taxation is a consequence of investment, not a reason for investment. The purpose of tax planning is to take advantage of the available opportunities under current taxation laws to improve a client’s financial position.
It is important to understand how each asset class and investment are taxed to enable appropriate tax planning for your overall wealth. The main ways your investments are taxed are:
▪ Direct taxes which include pay as you go income taxes
▪ Indirect taxes such as GST, excises & levies (tobacco, petrol etc.)
▪ Capital Gains taxes
▪ Fringe Benefit taxes via salary packaging
How much you pay tax will depend on whose name you place an asset or business under. This is critical to ensure smooth transition of assets between generations. The main tax structures used for investment and tax purposes may include:
Other issues be taken into account for structures are:
▪ Overall tax rates is payable
▪ The level of asset protection from creditors
▪ Timing of payments form entities
▪ Structures ability to distribution profiles
▪ The ability to utilise tax losses
▪ The ability to access CGT concessions
▪ Beneficiaries and their ages
▪ Property: Rent is fully assessable, and expenses are deductible
▪ Bank Investment: Interest is assessable
▪ Share Investments: dividends and CGT are assessed
▪ Managed Fund Distributions: assessable under tax
It is important to consider where your assets are placed to ensure that tax is sufficiently minimised to increase overall investment returns. The following strategies are critical in achieving greater wealth over the long term to meet your retirement lifestyle and minimise your overall tax payable.
▪ Negative Gearing
▪ Income Splitting
▪ Buying tax effective investments
▪ Salary packaging
▪ Business Structures
There are many other different areas that can be affected by tax which includes:
▪ Superannuation: How is superannuation paid out to your beneficiaries?
▪ Insurance Policies: what are the tax implications of insurance payments?
▪ Estate Planning: How are assets in your Will passed to your loved ones?
▪ Family Home: Will you need to pay tax on future sales?
Seeking advice from a CERTIFIED FINANCIAL PLANNER® professional can help you understand the how to minimizes your overall taxes benefits and build your overall retirement capital.
There are also other important issues to consider which include:
1. Expatriate taxation planning: Implications of returning to Australia
2. Superannuation planning: Tax implications on cash withdrawals
3. Change of asset ownership
4. Legislative updates to taxation laws
5. Self-managed Superfund (SMSF) taxation planning
6. Setting up a family discretionary and Will trust