Advising on appropriate ownership of financial products: Australia operates on a tiered taxation system, where higher earnings result in higher taxes. Therefore, careful consideration should always be made about ownership of assets, taking into account future income and growth.
Advising on appropriate structures: Not all structures are taxed equally. The structure that owns your asset can significantly affect your taxation (as well as providing other important legal protections). Assets can be owned by a company, discretionary trust, unit trust, insurance bond, among others, and each has different taxation outcomes for income and capital gains, as well as other legal ramifications. It’s essential to plan the appropriate structure for both your current and future income and assets.
Negative Gearing: This occurs when the expenses associated with an asset exceed the income it generates. Individuals who are negatively geared can deduct their loss against other income, such as salary, reducing their overall tax liability for the financial year.
Imputation Credits: When Australian companies pay dividends to investors, they offer franking credits. These credits ensure that investors are not double-taxed on already taxed shares, and depending on the investor’s marginal tax rate, can reduce the tax on investment income or even offer a tax refund.
Superannuation: This is a highly effective, tax-efficient structure offering both short-term and long-term tax benefits. Contribution strategies can provide significant tax savings, while the structure itself can significantly reduce income and capital gains tax on chosen investments.
Insurance: Although the primary purpose of insurance is to protect your income, assets, business, or family, its ownership and structure can have significant tax implications. A well-thought-out insurance strategy can help manage these tax consequences effectively.
