These days investing can be more savvy, putting a bit of thought in the investment and then might be able to invest in a more tax efficient way.
The first step in investing your money is understanding the different types of taxes that apply in Australia. Most of the people in Australia look at their income tax and believe that’s all the tax they pay. If you are one of the Australia’s that are in the highest tax bracket you are paying 47% on portion of your tax income to the tax office.
In Australia there are three main types of taxes: direct tax, indirect tax and capital gain tax. Direct tax it’s a straight forward, collected on your income, such as salary or wages, even the medicare levy. Indirect tax are applied goods and services you purchase such as GST, fuel excise, stamp duty and land tax. Then capital gain tax is a tax on any profit that has been made when selling as asset for more then a cost.
There are ways to facilitate tax minimisation on investments including negative gearing, making superannuation salary sacrifice contributions and claiming deductions directly to investment income. Negative gearing is an investment strategy that involves purchasing a property that holds costs greater than the rental income it generates. For salary sacrificed superannuation contributions there are two choices to salary sacrifice your pre-tax pay, or make a personal co-contribution from your after-tax and claim a deduction.
Getting started on tax planning and investing the right way, start by knowing what your marginal tax rates are, investment strategy is likely to be tax effective for you or not. Choosing the right structure, this will depend on the goals and other factors such as your income and marginal rates. Developing the best strategies to maximise your income while minimising tax. Minimising tax and building sustain wealth at the same time can be very intimidating so to focus on clever tax minimisation that should be discussed with a qualified and experienced tax accounts.
Feel free to contact Lana and her team at Matovic Business Accountants if you would like to discuss your business’ accounting and bookkeeping needs.
Email us at info@matovicaccounting.com.au or call (07) 3557 5721.
Leave a reply