It’s Not Just About Saving Tax

Article Tags:

, , ,

With the End of Financial Year fast approaching the most common question we are asked is “How can I save tax?

Firstly a quick caveat, whilst we are licenced to provide ‘Tax Financial Advice’ we are not tax agents. One thing we have learnt over the years is, if you spend $3 to save $1 in tax then you are still $2 worse off. The reverse is also true, if you are building your wealth and your investment earnings increase your income, your tax too will increase. Paying more tax in this instance is ok as you would still be better off at the end of the day.

Wealth creation is about putting you in a better financial position, not just about saving tax. Anything that reduces your taxable income should provide you with some other benefit. Superannuation contributions are regularly used to reduce taxable income, which is great if your purpose of contributing to super is to build your wealth to assist with funding your retirement lifestyle.

But there are rules. Lots of rules. Rules on superannuation that restrict: when you can access these funds, when you are eligible to make contributions and how much you can contribute that could potentially reduce your taxable income for the year.

This may be suitable for you, but not everyone. If you are considering making additional contributions to your superannuation, please contact your Financial Adviser for advice based on your personal situation and objectives. It is important to address this soon, as pre-30 June is an extremely busy time of year for product providers, and many have cut-off dates for contributions to ensure they are applied to this financial year. They will not guarantee processing of contributions received after these cut-off dates.

Of course, there are many other strategies that you may be able to access depending on your situation so it may pay to reach out to your accountant. Don’t leave it too late though.

Katrina Dhu (GradDipFinPlan, DFS(FP), ADFS(FP), CommDec.) is a representative of Alman Partners Pty Ltd, Australian Financial Services Licence No: 222107.

Note: This material is provided for information only. No account has been taken of the objectives, financial situation or needs of any particular person or entity. Accordingly, to the extent that this material may constitute general financial product advice, investors should, before acting on the advice, consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation and needs. This is not an offer or recommendation to buy or sell securities or other financial products, nor a solicitation for deposits or other business, whether directly or indirectly.