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Tax-effective investing

The Australian Taxation Office (ATO) acknowledges that everyone has the right to arrange their financial affairs to reduce their tax liability – this is often referred to as tax planning, or tax-effective investing. Although we are not accountants and do not provide taxation advice, we are qualified to discuss tax-effective strategies with you and can liaise with your accountant (or an accountant within our network) on the subject.

We have a good understanding of tax implications in relation to investments, which could result in you paying less tax than you may be paying now. Effective tax planning will help you reduce your taxes, and having tax effective investments will help you ‘offset’ expenses against profits so that you can legally reduce the amount of tax you pay.

A common strategy to reduce your taxable income is through negatively gearing an investment property or through a salary sacrifice arrangement, or increasing your claimable deductions by donating to a charity.

These strategies should be considered with your ability to generate surplus income, your budget and your overall goals and objectives.

You can claim deductions for some expenses that are directly related to earning income from your investment for example, interest on money you borrow to buy shares. Be wary of opportunities to hide your investment income or artificially inflate your deductions.

The ATO deems that tax planning is legitimate so long as it's done “within the letter and the spirit of the law”. However some arrangements can (and do) attract the attention of the ATO (who then determine whether they are lawful or not).

Involvement in a tax avoidance scheme can risk your original investment. You might also have to pay back any missing tax – with interest – and penalties.

For more information visit the ATO website: