Preparation, Preparation, Preparation
Appropriate tax planning can make a huge difference to your financial situation. Many of our clients ask about ways to cut income tax, reduce capital gains liability, optimise Family Tax Benefits, or increase their cash flow. As a trusted financial planner in Melbourne, we will guide you in the smaller ways of keeping receipts for expenses, making donations and choosing the best method to claim travel costs.
More importantly, we will help you grow by examining the bigger picture.
Keep More of the Income You Earn
It’s been said we should look after the pennies and the dollars will take care of themselves. This is true when it comes to minimising the tax we pay. However, tax legislation is always changing, so it’s important to keep abreast of new opportunities.
Use the Capital Gains Tax Discount
An asset generally increases in value over time – for instance, a house, a business or a share in a company. A ‘capital gain’ is the profit made when the asset is even tually sold. The increase in the asset’s value is subject to tax which is appropriately called capital gains tax.
The capital gain is treated as income and is taxable but there is a discount which can be applied to this tax. The
discount percentage is available to individuals, trusts and superannuation funds but companies are not entitled to this discount. The discount is 50% for capital gains made by an individual or a trust and if the gain is made by a complying superannuation fund the discount is 33.33%. As an investor, you will need to hold an asset for more than 12 months to be entitled to the capital gains tax discount. By doing this the tax savings could be thousands, especially if the value of an asset has significantly increased. For capital gains tax purposes, I would suggest you own appreciating assets directly, or through a trust, rather than through a company.