Q&A: Investing and Tax
Are you an investor or thinking of becoming one? Here is a Q&A on investing and tax that will help you get things done.
When investing, the choice of investment structures play a crucial part. These structures commonly comprises sole trader, partnership, trust or SMSF.
Why are these investment structures important?
As a start, they have various implications in areas of asset protection, income tax rates and Capital Gain tax. The structures with the most effective tax outcomes include trust or SMSF.
What are the tax implications on these investment structures?
The table below illustrates the various tax implications on individuals, partnerships, trust and SMSF.
Some key points to note if you are thinking of investing in properties
- Be familiar with these jargons : negative gearing, positive gearing, joint tenants, tenants in common
- Note that negative gearing clamp down may happen in the future
- Do invest in a good depreciation report
- Consider neutral gearing properties if you are looking to build a portfolio of properties
- Think of a prepayment of interest in advance prior to the financial tax year end to claim it in full. This will reduce your tax liability
- Consider to time your capital gains with other investment losses, particularly on non-performing investments. The realised loss can be used to offset any capital gains or carry forward to use against future capital gains.
Please take note that the information contained here are general in nature. It does not take into account of your individual needs and objectives. But if you want some more information, get in touch with us!
As good accountants do, we are like surveyors, we advise you on where the tax boundaries are. We help you build your structure that suits your circumstances. We love working together as a team with your financial planners.
(Contributed by Molly Lee)
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.