As a certified financial planner I know that every investing decision you make has to stand on its own feet. As a chartered accountant I also know that you should always pay the correct amount of tax but you should never leave a tip. Frankly, our politicians don’t deserve a tip.

For those on higher incomes, such as our theoretical dual-income couple, who earn $140,000 and $40,000, taxes are a real and material expense that need to be considered when making smart investment decisions.

STRATEGY 1

Salary sacrifice to turbocharge your super

Depending on your age, if a couple earn more than $180,000 there are a number of likely expenses they face. Mortgage repayments, living expenses, private school fees and travel/entertainment all normally chew up a significant portion of take-home pay.

Regardless of age, my most financially successful clients allocate a portion of their income to top up their superannuation. Many seek to retire early and they know they will need to fund 25 to 30 years of their dream retirement. So every little bit helps.

For someone earning $140,000, potentially 37¢ in the dollar goes in income tax, 2¢ in Medicare and NDIS levy and 1.5¢ in medical levy surcharge (if you’re a couple with combined income of $180,000 with no private health insurance). So you could end up with as little as 59.5¢ after tax from every extra dollar you earn.

By comparison, if you salary sacrifice pre-tax income into super the tax is capped at 15%. So a salary sacrifice of $25,000 (the limit from July 1, 2017) will save 25.5¢ in every dollar in tax. Instead of you having 59.5¢ in the dollar, your super receives 85c in the dollar. Of course, you can’t access it until you’re 60 and retired, but that money will also grow quicker in the concessionally taxed environment of super. You win on tax both ways!