Tax Effective Strategies
Tax strategy is an integral part of the financial planning process. Structuring the way you receive your salary, contributing to superannuation, investing, managing risk and debt can all contribute to significant tax savings and are an essential part of your wealth creation journey.
We work closely with your specialist advisers to ensure your financial outcomes are the most tax effective solution for your circumstances.
‘Gearing’ is a general term meaning ‘borrow to invest’. It simply means using borrowed money to make investments in shares, properties or other forms of investment that you would not be able to make using only your own funds.
Most people associate negative gearing with buying an investment property. However, borrowed funds can also be used for shares, managed funds or bonds.
While many adopt a negative gearing strategy for its tax advantages, it's important to be aware that a tax deduction can only be claimed if there is a loss on the investment. This means it's important to borrow sensibly because gearing can amplify investment gains as well as magnify losses. As negative gearing is a specific form of gearing with the express aim of incurring tax deductible expenses in excess of the income returned from the investment (notwithstanding any capital gain) it must be considered carefully.
While negative gearing is a valid form of investment strategy in many situations, the complexity of the approach means that those choosing to pursue the strategy should seek professional advice before doing so.
Our advisers can explore investment options, including negative gearing, in the context of your specific situation. This may include:
- assessing the tax implications of negative gearing against your marginal tax rate and asset profile, and whether or not there are potential benefits available to you
- assisting with the identification of suitable investment types (e.g. property or shares) and specific investment vehicles (e.g. direct investment or managed funds)
- assist with finding the best loan for your situation
- structuring your affairs to minimise the potential cash flow challenges that arise from negatively geared investments.
It is always a good idea to go into strategies like negative gearing with your eyes open to the benefits and their associated risks. Our advisers have the knowledge and experience to ensure that you approach all your investment decisions with absolute clarity.
For more information, contact us.