Taxation Planning

Dated: May 2004

Whilst tax planning is an area you need to discuss with your accountant, there are a couple of investment strategies that have been favourites with investors over the years. These include:

  • Superannuation continues to be one of the most tax effective investment options available and plays a significant part in tax planning. Super co-contribution and spouse contributions are some of the lesser known strategies, while other strategies include contributions by self-employed workers and salary sacrifice.
  • Prepay interest on leveraged investments is a common way of bringing the interest deduction into this year while deferring the income tax till next year. Over the last couple of years there has been a number of different and innovative products launched that now gives investors a greater choice.

Some of the newer lending products recently introduced to the market place include "protected loans" where the initial capital is guaranteed and protected from falling in value. These products are available through both direct shares and managed funds.

These "protected loan" products are designed to provide investors with tax advantages from negative gearing, whilst also providing security of capital; certainty of regular income as well as the added bonus of locking in profits from time to time. These products can also be used to build some defensiveness into an investor's portfolio.

Before considering any tax planning strategy we strongly suggest you consult your accountant first.

 
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