Money Magazine Australia|July 2017

Higher earners, such as dual-income couples, need to make smart decisions to maximise wealth and minimise tax

Article Reader

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!

Bu hikaye Money Magazine Australia dergisinin July 2017 sayısından alınmıştır.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

Bu hikaye Money Magazine Australia dergisinin July 2017 sayısından alınmıştır.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MONEY MAGAZINE AUSTRALIA DERGISINDEN DAHA FAZLA HIKAYETümünü görüntüle
An outrageous, beautiful monopoly
Money Magazine Australia

An outrageous, beautiful monopoly

Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.

time-read
4 dak  |
July 2024
Drop the anchor to judge value
Money Magazine Australia

Drop the anchor to judge value

Buying and selling decisions should be based on where a stock price is going, not where it has been.

time-read
3 dak  |
July 2024
Powering the AI boom
Money Magazine Australia

Powering the AI boom

Beyond the software and chipmakers, where will the energy come from?

time-read
3 dak  |
July 2024
Get into life
Money Magazine Australia

Get into life

Tucked inside super are products that can protect you from life's inevitable uncertainties.

time-read
5 dak  |
July 2024
Paths to home ownership
Money Magazine Australia

Paths to home ownership

Taking the road less travelled can sometimes deliver unexpected benefits.

time-read
5 dak  |
July 2024
Sold! Quick ways to add value
Money Magazine Australia

Sold! Quick ways to add value

Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.

time-read
5 dak  |
July 2024
Money lessons the kids need to know
Money Magazine Australia

Money lessons the kids need to know

Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.

time-read
4 dak  |
July 2024
Property-investing rules: are they likely to change?
Money Magazine Australia

Property-investing rules: are they likely to change?

The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.

time-read
3 dak  |
July 2024
What's love got to do with it?
Money Magazine Australia

What's love got to do with it?

A rollercoaster of emotions could be driving poor crypto behaviour.

time-read
3 dak  |
July 2024
Are we ready to be cash-free?
Money Magazine Australia

Are we ready to be cash-free?

Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.

time-read
2 dak  |
July 2024