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    • Common Tax Planning Strategies Explained: A holistic approach to tax efficient wealth building. Travis Morien Compass Financial Planners Pty Ltd 08 9332 0544 http://www.travismorien.com
    • Basic principles
      • There are many perfectly legal and socially acceptable ways to increase your wealth in a tax efficient manner. Some of these methods are very powerful. Legitimate methods of increasing your tax efficiency are called “tax planning”.
      • Methods that are unlawful are categorised under two different labels:
        • “ Tax avoidance” is where you set up contrived accounting structures and strategies that abuse a loophole so you can claim large tax deductions or take advantage of some benefit that was never intended to be used in such a way.
        • “ Tax evasion” is where you deliberately try to hide income from the Tax Office, by various methods including secret bank accounts, not recording cash transactions, “cooking the books” etc.
    • The focus of tax planning
      • Tax planning should only ever be done with a view to increasing your total wealth.
      • There are some people that enter into all sorts of dubious arrangements in order to obtain a tax deduction, including trying to minimise their income.
      • Minimising your income is silly, what you want to do is increase your assets and/or after tax income .
      • Some popular tax planning strategies are highly effective at reducing your tax, but produce little benefit in terms of wealth creation. Some strategies actually make you worse off, either immediately or in the long term.
      • Hence, tax planning is just a subset of overall financial planning, which needs to take into account investment strategy, retirement planning, wealth building etc.
    • Legality and ethics
      • There is always a grey area between tax planning, tax avoidance and tax evasion, and the Australian Tax Office has a surprising amount of discretion to decide where the boundaries lie.
      • It should be remembered that just because some “expert” says it is ok, doesn’t mean that it is ok. Also remember that just because a tax adviser openly advertises the strategy in a newspaper doesn’t mean the Australian Tax Office has approved the scheme. There have been many high profile prosecutions over the years and the fact that “everyone does it” makes the ATO more likely to shut it down.
      • In other words, be careful about listening to advisers that seem to recommend “too good to be true” strategies like clever loopholes and novel types of trust that are supposedly a closely guarded secret of “the rich”.
      • Serious penalties including huge fines and jail terms may apply if you do something illegal. Blaming your advisor usually won’t get you off the hook.
    • “ The Secrets of the Super Rich”
      • Contrary to what many “poor” and “middle class” people have been led to believe, there really are no secret techniques used by the wealthy that enable them to get through life paying little or no tax.
      • Wealthy people often employ very good advisors but strategies used by the wealthy are almost always the same simple strategies mentioned in this presentation. The difference is that a skilled advisor knows how to best combine these strategies for overall results.
      • People generally get wealthy not by using some flashy “secret” technique, but because they were good at building a business or investing wisely.
      • Gurus promoting the idea of “secrets” are usually conmen seeking to dupe the poor and middle class, you generally don’t find millionaires lining up to attend $10,000 seminars advertised in the newspaper. Most wealthy people that I know scoff at such seminars.
    • There are many different types of tax planning strategies:
      • Strategies for obtaining tax deductions
      • Strategies for obtaining tax offsets (credits)
      • Strategies for moving income away from an entity paying a high rate of tax to an entity paying a lower rate of tax.
      • Strategies for moving profits and losses between tax years, either to defer tax or take advantage of a more favourable tax rate.
      • Strategies for reducing the amount of assessable capital gains from an investment sold at a profit.
    • Deductions vs offsets
      • When you claim a tax deduction for something, you obtain a tax benefit equal to the amount of tax you would have paid on that income at your tax rate. For example, if you are on the top marginal tax rate of 48.5%, claiming a $100 Tax deduction will produce a tax benefit of $48.50.
      • An offset is a credit against tax payable. If you are entitled to a $100 tax offset, your total tax bill will be reduced by the full $100.
    • Moving income between entities on different tax rates
      • The term “entity” has a very broad meaning and can include different people, companies and superannuation funds.
      • A common and very simple example of this is when a couple make income producing investments in the name of the partner on the lower tax rate, often a non-employed spouse.
      • More complex strategies may involve structures like a discretionary trust, the trustee may be able to choose the best way to distribute income between several beneficiaries which may include people or companies.
    • Moving income between tax years
      • There are many ways to move income between tax years. If you are working now but likely not to be working in a few years (retired, holiday, ill etc), then you may be on a lower tax rate then. It might be sensible to defer the sale of any assets trading at a capital gain until the lower income year.
      • Other times, people may wish to bring forward income if they expect a substantial increase in taxable income in the future.
      • A powerful way to move income from this tax year into a tax year that may be many years from now is to invest in an agribusiness scheme.
    • More tax efficient investing
      • One of the biggest expenses to a successful investor is capital gains tax (CGT).
      • Every time you sell an eligible asset at a profit, you need to remit part of that gain to the Australian Tax Office as CGT.
      • A discount of 50% applies if you hold the asset for more than one year, so medium to long term investments are vastly more tax efficient than shorter term trades.
      • Many people overlook the fact that if you defer the realisation of a capital gain you get to keep your unrealised tax debt in the market earning you dividends. There is actually a small but significant increase in your effective rate of return if you can keep portfolio turnover down.
    • Managed funds and tax efficiency
      • It pays to check on the tax efficiency of any managed fund you are thinking of investing in.
      • Some funds have a relatively low portfolio turnover and tend to actively manage their taxable distributions to reduce the tax burden to their investors.
      • Other funds trade excessively, and make huge distributions every year, much of it non-discountable short term capital gains.
      • Obtaining such information isn’t easy if you are a general member of the public, this is where a good financial advisor can be of assistance.
    • Tax offsets
      • There are so many different tax offsets that you should talk to an accountant to see which ones you can claim.
      • Common ones include franking credits on share dividends, low income tax offset, Senior Australian’s Tax Offset, spouse superannuation contributions offset, personal super contributions offset, dependent spouse offset, family tax benefits part A and B, baby bonus and many more.
    • The three tax systems of Australia
      • Personal income is taxed in Australia on a marginal tax rate system. The higher your income, the higher the average rate of tax you pay. Capital gains on assets held more than one year are taxed at half of your marginal tax rate.
      • Corporations in Australia pay a flat rate of tax on income of 30%. No discounts apply to capital gains.
      • Superannuation funds pay tax of 15% on income and 10% on long term capital gains. A surcharge may also apply for contributions for high income earners.
      • Arguably GST is counted as a fourth tax system, but is outside the scope of this discussion as it has limited applicability to investment strategies.
    • Personal tax rates for Australian residents 2004/2005 * Medicare levy of 1.5% may also apply $18,612 + 47% of excess over $70,000 $70,000 plus $13,572 + 42% of excess over $58,000 $58,001 to $70,000 $2,652 + 30% of excess over $21,600 $21,601 to $58,000 $0 + 17% of excess over $6,000 $6,001 to $21,600 Nil $0 to $6,000 Tax payable* Taxable income
    • Personal tax system cont’d
      • Contrary to what many people think, your marginal tax rate is not equal to your average tax rate.
      • For example, if your income is $80,000, you will be on the top marginal tax rate. Including Medicare Levy, the marginal tax rate of such a taxpayer is 48.5%.
      • The amount of tax actually paid by someone earning $80,000 is $24,512 including Medicare Levy. This works out to an effective tax rate of about 31%. The top marginal tax rate only applies on the last $10,000 of income, though of course any additional income would be taxed at 48.5% and most tax planning that we do will be on dollars that would be taxed at the highest rate.
      • For long term capital gains (asset held more than one year), the capital gain profit is first discounted by 50% and then added to assessable income at marginal tax rates.
    • Companies
      • Companies pay tax at a flat rate of 30%. This applies to both income and capital gains.
      • High income investors often buy investments in the name of a Pty Ltd company so they will be taxed at a maximum 30% on income, though investors need to take account of the fact that capital gains will always be taxed at 30%, rather than the effective top rate of 24.25% paid on long term gains earned in the name of a person.
      • Companies are distinct tax entities recognised by the Tax Office, and can retain income and assets in their own name and need to lodge their own tax returns.
      • A common tax planning strategy is to retain and reinvest income in a company, only drawing a dividend when the shareholder’s tax bracket equals 30% or less.
      • Companies can be used as an efficient “parking” vehicle to defer personal income tax.
    • Trusts and other structures
      • Unlike a person, company or a superannuation fund, trusts are not entities that pay tax. A trust is a “fiduciarial obligation” between a trustee and the beneficiaries.
      • Investments can be made in the name of a trust, but all income and capital gains must be distributed to beneficiaries every year or the trustee will pay tax at the top marginal tax rate on undistributed income.
      • A “fixed” trust is set up so that all beneficiaries get a fixed entitlement to the income, capital gains and capital of the trust. “Discretionary” trusts give the trustee a lot of flexibility in determining how to make distributions and offer significant tax planning opportunities.
      • Beneficiaries of trusts can be people, companies, partnerships and other trusts.
    • Superannuation
      • Although the superannuation system is complicated and many people do not trust it, super is still one of the most tax efficient ways to build wealth.
      • You only pay 15% tax on income in a super fund and the capital gains tax rate on assets held for more than a year is 10%.
      • Another advantage of super is that this is one of the most difficult assets for a creditor to get his hands on, so superannuation is ideally suited to business owners and professionals wanting a protected place to store their long term savings.
    • Reasonable benefits limits
      • Superannuation is an excellent savings vehicle for long term retirement savings. The tax efficiency and the asset protection characteristics are so good that limits have been introduced that stop very wealthy people from taking too much advantage of it.
      • A “reasonable benefits limit” (RBL) is the most one can take out of super while still obtaining maximum tax concessions.
      • The lump sum RBL is $619,223 in the 2004/05 tax year. This figure is indexed each year with inflation.
      • You can access a higher RBL, the “pension RBL” by putting at least half your benefit into certain “complying” income streams. The pension RBL is $1,238,440 in 2004/05. The pension RBL is higher to encourage people to convert their super into pensions that will last at least for their life expectancy, rather than withdrawing it and spending it in a short period of time.
    • Withdrawing from super – lump sums
      • There are various components of super which are all taxed differently (we’ll gloss over the complexities in this presentation), the most common components are “Pre 83”, “Post 83” and “Undeducted”.
      • 5% of Pre 83 money withdrawn from a super fund is taxed at marginal tax rates. 95% is tax free.
      • In the 2004/05 tax year, you can withdraw $123,808 of “post 83” money from a superannuation fund before having to pay any tax on this lump sum. This figure is indexed upwards every year. The balance of lump sum withdrawals is taxed at 15% (+ 1.5% Medicare), subject to reasonable benefits limits.
      • Undeducted components can be withdrawn from super tax free.
      • Pre and Post 83 untaxed amounts withdrawn in excess of your reasonable benefit limit are taxed at 47% plus Medicare, post 83 taxed amounts drawn as a lump sum in excess of your RBL are taxed at 38%.
    • Withdrawing from super – income streams
      • Income streams are taxed at marginal tax rates, minus a 15% superannuation pension tax offset. The earnings within the fund itself are tax free once the fund begins paying an income stream.
      • Undeducted components create a “deductible” amount of the income stream that is tax exempt. The size of the deductible component varies depending on the type of income stream, the term of the payments and your life expectancy.
      • Pre and Post 83 money withdrawn in the form of an income stream that is in excess of the Reasonable Benefits Limit is taxed at normal marginal tax rates, but doesn’t attract the 15% pension tax offset.
    • Superannuation contributions surcharge
      • If your “adjusted taxable income” (ATI) exceeds certain thresholds, an additional tax is paid on contributions to superannuation. This tax does not affect earnings, just contributions.
      • Adjusted taxable income is your total remuneration, which includes salary, superannuation contributions and fringe benefits.
      • If your ATI exceeds $99,710 (2004/05 tax year, figure is indexed annually), you may be liable to pay some surcharge on your contributions. This surcharge rate increases from 0 to 14.5% when your ATI reaches $121,075. Below $94,691 surcharge is zero, above $121,075 it is 14.5%. If your ATI is inside this range, a formula will apply.
    • Superannuation contributions surcharge cont’d
      • Surcharge rate = (ATI - $99,710)/1,709.2. (in the 2004/05 tax year)
      • For example, if your ATI is $110,000, your surcharge rate will be 6.02036%. Note that surcharge rates are always worked out to 5 decimal places.
      • If your remuneration was $85,000 salary plus $25,000 super, you’d pay 6.02036% x $25,000 = $1,505.09 in surcharge, in addition to the $3,750 (15% x $25,000) you would have paid anyway in “contributions tax”.
    • Strategies for obtaining tax deductions:
      • Salary packaging or direct deductions of business expenses (if eligible).
      • Claiming work, transport and some self-education expenses as deductions.
      • Negative gearing (in fact, any gearing).
      • Deductions associated with property (depreciation allowances etc).
      • Agribusiness.
    • Salary packaging
      • A “salary sacrifice” arrangement is a deal agreed to between an employee and an employer to swap some cash salary for another type of non-cash benefit.
      • You would do this because taking remuneration in the form of a non-cash benefit often means you don’t have to pay income tax on that benefit.
      • When you negotiate a remuneration scheme with an employer that includes salary sacrifice, this is called a “salary package”.
    • Salary packaging cont’d
      • You can salary package virtually anything, but to stop abusive arrangements there is an extra tax paid by the employer called Fringe Benefits Tax. (FBT)
      • The amount of FBT paid on items that attract the full rate of FBT is calculated such that the employer pays the same amount of tax as if you had received it yourself and paid the top marginal tax rate (48.5%). Naturally, the employer will have to pass this cost on to you and so you would gain no benefit on many packaged items.
    • Salary packaging cont’d
      • Some benefits attract no FBT, some attract a partial amount of FBT and some the full rate of FBT. There is a tax saving if you take FBT exempt items or items that attract FBT at a concessional rate.
      • Common FBT exempt benefits: superannuation, employee share schemes, laptop computers, mobile phones and many benefits that would be “otherwise deductible”.
      • The most commonly packaged benefit that attracts a concessional rate of FBT is a car. Depending on what you use the car for and how far you drive it every year, there can be a substantial tax saving for salary packaging a car, usually with some sort of lease arrangement.
    • Maximum deductible contributions
      • An employer can only package a limited amount of income into superannuation and claim a tax deduction on it. This limit is called the Age Based Limit, and the maximum contribution on which deductions can be claimed is called a Maximum Deductible Contribution (MDC).
      * Self employed and unsupported people can claim a tax deduction on 100% of the first $5,000 contributed and 75% of the balance. Employers can claim a 100% tax deduction on all contributions for their employees up to the employee’s age based limit. $126,306 $94,980
      • 50
      $49,936 $38,702 35 – 49 $16,912 $13,934 < 35 MDC* ABL Age
    • Income splitting
      • Income splitting is a very common strategy and is often quite easy to implement.
      • If you can make investments in the name of a spouse on a lower marginal tax rate (for example, buy shares, managed funds or invest in term deposits) then obviously less tax will be paid than if investments are made in the name of the person on the higher tax rate.
      • Discretionary trusts allow a trustee to split income in a very flexible manner, being able to potentially choose from a number of beneficiaries.
      • Note that there are special high tax rates for minors that receive “unearned income”, these tax rates run as high as 66%. The tax free threshold for a person under 18 years is only $416, but with the low income tax offset it effectively rises to about $643.
    • Income splitting continued
      • You can income split by investing in the name of a person on a lower marginal tax rate or, provided you have sufficient investment income to make paying the extra accounting costs worthwhile, you can invest via a discretionary trust that allows you to decide every year who gets income and capital gains distributions.
    • Negative gearing
      • “ Gearing” is the practice of borrowing money for investments like shares or property. “Negative gearing” is where the amount of income received from the investment is less than the interest expense. You claim the shortfall as a tax deduction. You can also do “positive gearing” where the income exceeds the interest and if you are able to balance the cost it would be called “neutral gearing”.
      • Negative gearing is particularly tax efficient because while the interest shortfall is 100% tax deductible, the capital gain (assuming there is one) will only ever be taxed at half your marginal tax rate if you hold for more than one year. When you run the numbers on this, the amount of return you need on your growth investments is less in a simple percentage term than the interest rate on your loan.
    • Negative gearing continued
      • Negative gearing is not a tax planning strategy as such, it is a tax efficient wealth building strategy.
      • It is important to note that when you borrow to invest you introduce extra risks related to your ability to service the debt and a greater level of exposure to market risk due to the larger portfolio. Some forms of borrowing introduce other risks as well, like the risk of margin calls.
      • Unless you borrow vast amounts of money it is unlikely that the size of the tax deductions will be large enough to make a serious dent on your assessable income. That is why I don’t classify this as a pure tax planning strategy.
    • Gearing and risk
      • Although the profits can be fantastic, the risks of gearing should not be ignored.
      • Borrowing $100,000 to invest means you have $100,000 at risk in the market. If there is a decline of 30%, and declines of this size are common in both shares and property, you would lose $30,000. If you need to sell the investment you may end up with a debt you can’t afford to pay back.
      • There is also interest rate risk, if rates rise significantly people can get themselves in lots of trouble if they have borrowed too much.
      • It is important to always consider whether you are in any position to accept the chance of losses before you invest.
    • Pre-paying interest
      • It is legal to claim a tax deduction on expenses for interest as much as 13 months ahead.
      • A common strategy that people use toward the end of the financial year is to pre-pay interest to a lender. This results in bringing forward tax deductions that would otherwise be incurred in the next financial year (but since the dividends from the investment haven’t been received they won’t add to assessable income until next year).
      • Most lenders that allow you to pre-pay interest also give a discount on the interest for doing so, so not only do you save tax, you also pay less interest.
    • Capitalising interest
      • Some lenders enable you to “capitalise” the interest, which means they just keep adding the interest to the account balance owing (up to an approved credit limit).
      • The loan balance will keep growing, increasing your tax deductions. You can use the cash to either buy more assets or to pay off another loan with a higher interest rate or a non-deductible personal loan.
      • Capitalising interest is sometimes called “double negative gearing.”
    • Tax deductible managed investment schemes (MISs)
      • Some investments in primary production schemes are tax deductible. Normally these types of investment are in the agriculture or film industries, though there are all sorts of other schemes.
      • You claim a tax deduction of up to 100% of your initial application money, but when the project matures you’ll be taxed on 100% of the return.
    • Example: Agribusiness
      • The most common type of tax deductible investment is tree farming (silviculture). There are many crops available including eucalyptus hardwood, pine, sandalwood, paulownia and a number of other exotic timbers.
      • Also popular are horticultural crops ranging from citrus and tropical fruits through to olives, almonds, grapes and some other crops like wildflowers, ginseng, coffee and truffles.
    • Hardwood tree farming
      • The most popular type of agribusiness scheme, and arguably the least risky, is eucalyptus tree farming. There are longer term projects (about 20 years) where the wood is grown for sawlog timber and veneer, and medium term projects (just over 10 years), where the wood is grown for chipping for the production of paper.
      • This sector does in fact receive a high degree of government support, as it presents a more environmentally friendly alternative to logging native forests and creates valuable export revenue and employment in rural areas.
    • How a typical blue gum project works
      • Claim a 100% tax deduction for planting expenses (about $5,000 - $8,000 per hectare is common).
      • The blue gums grow for 10 – 12 years, the project manager looks after the trees and then arranges the harvest. Depending on the up-front payments, there may also be deductible ongoing management fees.
      • When the wood is harvested, you receive the proceeds as fully taxable income.
    • Investment characteristics of agribusiness
      • No liquidity. You usually have to wait more than ten years for a return (though some projects are shorter term).
      • Moderately high risk: fire, flood, currency movements, price movements of the commodity.
      • Return data is often hard to find, but a good agribusiness project should produce returns at least as high as equities.
      • Not really tax efficient if you are on the same or a higher marginal tax rate when you get the harvest. Ideally you would want to invest in them while you are earning good money and paying tax at the top marginal tax rate, but retired in the year of the harvest. This is an example of moving income from one tax year to another to take advantage of lower marginal tax rates.
    • “ Mortgage accelerator” strategy
      • Interest incurred on a loan to buy into an agribusiness scheme is usually tax deductible.
      • If you have non-deductible debts their after tax cost can be nearly twice as much as deductible debts, for an investor paying the 48.5% marginal tax rate.
      • A common strategy is to take out a loan for an agribusiness investment and use the tax refund to pay off a non-deductible debt. The after tax interest bill is basically the same as before except now you have an agribusiness investment and future cash flow advantages.
    • Dodgy schemes and the ATO
      • “ Tax effective” investments have become notorious in the last few years following a widely publicised crackdown by the Australian Tax Office (ATO).
      • Many schemes were put together by accountants and lawyers purely for the tax deductions. Various “creative” accounting tricks were employed so “investors” were able to claim tax deductions several times larger than the amount actually invested!
      • As a profit was made just from the tax dodge, the crop was just a sideshow. Far greater effort was put into finding ways to increase the tax deductions than to research the commercial viability of the crop. Result: too many tea trees were planted, the price of tea tree oil fell below harvest and extraction costs, some blue gum plantations were made on cheap marginal land where the trees didn’t grow well. Many other crops simply failed to meet prospectus projections.
      • The ATO cracked down on these, and disallowed tax deductions. There is now a “product ruling” system where the ATO certify that they will allow the tax deduction on approved projects provided they comply with the ATO’s conditions.
    • How to get out of paying the superannuation contributions surcharge
      • High income earners that salary sacrifice a significant amount of income to superannuation will find that they are paying a significant amount of superannuation contributions surcharge.
      • By claiming a few tax deductions they may be able to reduce their adjusted taxable income to below the $99,710 threshold and thus no longer have to pay surcharge.
      • Common deductions claimed include negative gearing strategies and agribusiness.
      • When salary packaging a significant amount of money into superannuation, high income investors can pay a significant amount of super contributions surcharge.
      • If your income is not too far above the upper surcharge threshold and you are putting a lot of money into super, the amount of surcharge you can save by claiming a tax deduction can often come close to paying for the agribusiness investment!
      • For some investors taking maximum advantage of salary packaging as well as agribusiness extremely high effective rates of return can be achieved due to the very small net after tax outlays required after factoring in surcharge and other tax savings.
    • Timing and netting of capital gains
      • If you can hold on to your taxable capital gains as long as possible, you will obtain a benefit by having that money invested in the markets. Effectively an unrealised capital gain contains an “interest free loan” from the Australian Tax Office.
      • The longer you get to hold on to that gain, the longer you’ll be able to earn dividends and further growth on that money.
      • Therefore, methods that delay the realisation of capital gains tax can produce significant benefits.
    • Netting capital gains
      • If you sell an asset at a capital loss, you can only offset that loss against a capital gain. Generally, you can’t claim a capital loss as a direct tax deduction. Capital loss credits can be carried forward as long as is necessary for them to be used up.
      • Capital gains and losses are “netted”. Each year you pay capital gains tax on the total capital gains minus the total capital losses.
      • While it is sensible to defer the realisation of capital gains, the same can not be said of capital losses. In fact, a capital loss is a valuable asset for tax planning purposes and if possible should be realised. These losses can then be used to offset any sales you intend to make at a profit. By being quick to realise losses and slow to take profits you can delay the ultimate paying of capital gains tax for a very long time.
      • If you still like that particular asset, you could buy it back a short time later.
    • Deductible superannuation contributions
      • Employees can’t claim a tax deduction on their personal contributions, they must use salary sacrifice.
      • If you are self employed, or “unsupported”, you may be able to claim a tax deduction on some or all of your superannuation contributions.
      • A common post-retirement strategy is for people to liquidate their ordinary investment portfolio and claim a tax deduction on contributions to superannuation, to eliminate their capital gains tax liabilities.
      • The same strategy could be employed to reduce the tax liability on the harvest from an agribusiness project.
      • Note that rules apply specifying who can and can not make contributions to superannuation, there are a variety of tests of age and employment activity.
    • Superannuation co-contributions
      • This year a new incentive was introduced to encourage lower income taxpayers to make voluntary contributions to their super.
      • This scheme is called the “co-contribution”, and involves the government matching your contributions up to a maximum of $1,500pa.
      • The amount of the co-contribution depends on your taxable income, and is at a maximum for people with income and reportable fringe benefits below $28,000, reducing by 5c in the dollar as your income exceeds this, cutting out at $58,000.
      • Co-contribution = the lesser of your voluntary contribution and $1,500 – 0.05 x ($income&FB - $28,000). If the formula gives rise to a number below $20, the tax office will pay $20.
      • The obvious beneficiaries would be lower income employees, but the main beneficiaries are likely to be part-time working spouses and semi-retired people.
      • Co-contributions replace the old $100 super contributions rebate. Obviously this benefit is a lot more generous than the one it replaces.
    • One possible downside of tax planning
      • Before implementing any tax planning strategy, you need to consider the costs of doing so. Such costs include accounting, legal and advisor fees.
      • The benefits of implementing a sophisticated strategy may not be worth the bother in terms of time and money spent on creating and maintaining the strategy unless you have a fairly high income and/or a big portfolio. (Especially when creating tax structures like companies and trusts.)
      • On the other hand, there are a number of simple strategies that can be relatively easily and cheaply implemented.
    • Summary
      • There do exist legal and acceptable methods for reducing tax, but tax planning should only ever be of secondary importance behind wealth/retirement planning.
      • Some tax planning methods are very powerful, a combination of negative gearing, salary packaging and agribusiness can reduce the amount of tax paid to very low levels, but sometimes just taking the money and paying income tax on it is the better long term strategy.
      • An accountant and a financial planner can assist in implementing all of the strategies mentioned here, plus many others.
      • Disclaimer:
      • The material in this presentation does not represent a recommendation of any particular security, strategy or investment product. The author's opinions are subject to change without notice. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. Investors should seek the advice of their own qualified advisor before investing in any securities.