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Tax effective investing
With the end of the tax year fast approaching it makes sense to cover some of the tax incentives and strategies available to help you reduce your tax.
Income Splitting
Income splitting is one of the simplest and effective ways of reducing your tax liability. By putting investments into the name of a partner in a lower tax bracket, you can reduce the tax payable on gains and income from that investment.
Pay more into your superannuation
With an ageing population, the Government don not want to be left carrying the can if you retire without enough savings. As a result there are significant tax incentives for both super fund contributions and growth reducing the effective rate of tax payable.
Contributions from pre-tax income pay only get taxed at 15% rather than your income tax rate of up to 46.5%.
Rather than being taxed at your highest rate of income tax (up to 46.5%), tax within the fund is limited to 15%.
Borrowing to invest & margin lending
Interest and investment expenses are considered a legitimate tax deductible expense for investment and margin loans and makes these products an attractive source of funds for investment.
Using unlisted direct property to defer your tax liability
Investing in an unlisted direct property trust provides many tax advantages due to the significant building and depreciation allowances on new buildings. These tax advantages are effectively passed on to investors as tax deferred income.
This provides cash flow benefits because tax deferred income is generally not taxable when it is received, but is deferred until the investment is sold.
Due to the significant building and appreciation
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allowances on new buildings, unlisted direct property funds in many cases offer a tax deferred income to investors. ie tax is not immediately payable on the income, but deferred until the investment is sold.
Gearing into property trusts/investment property with high levels of tax deferment allows you to claim the full cost of the interest on the investment loan whilst not having to pay tax on the deferred income until the asset is sold.
Agribusiness offer both tax deductibility and returns independent a falling market
Agribusiness schemes with a tax ruling are 100% tax deductible to encourage investment in agricultural production in areas such as almonds, grapes and forestry. As an asset class with no correlation to the share market, this can be used as an effective diversifier but can be a relatively long term investment.
| Investment Notes |
| Funds Focus is issued under general advice only and is not personal advice. The price and value of investments and their income fluctuates: you may get back less than the amount you invested. Past performance should not be seen as an indication of future performance. Exchange rate fluctuations may have an adverse effect on the value of non-Australian funds and shares. Tax benefits and the value of these to you can change at any time and are based on the rate of tax you pay and our current understanding. The savings referred are correct as of 30/05/08. |
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This newsletter and all articles within this newsletter are issued by Wealth Focus Pty Ltd. ABN 87123 556 730 AFSL: 314872 of Suite 7, 49-53 North Steyne, Manly, NSW 2095. This newsletter is published, approved and distributed by Wealth Focus Pty Ltd. The articles within this newsletter have been prepared for distribution as general information only. Any individual should, before acting on the information within this newsletter, consider the appropriateness of the information, having regard for their own objectives, financial situation and needs and should seek professional advice if they are unsure as to the suitability of the products highlighted. We believe that the information in this newsletter is correct and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of compilation, but no warranty is made as to its accuracy, reliability or completeness. Wealth Focus does not accept liability for loss or damage arising from the use of this newsletter. Past performance is not a guide to future performance. When replacing an insurance policy, you should not cancel your existing contract without first issuing your replacement policy. We recommend that you read our Financial Services Guide and Investment Notes.
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| FUNDS FOCUS Investment newsletter: Issue 2, June 2008 |
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Order a ZERO entry fee PDS
To download or request a hard copy Product Disclosure Statement with no entry fee, please complete order form below. Portfolio Healthchecks and the Wealth Focus annual report can be faxed back on 1300 55 98 70 or posted to us for free at Wealth Focus, Reply Paid 760, Manly, NSW, 1655 |
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| What do we get paid |
Wealth Focus will rebate 100% of the entry fee on managed fund investments as additional units and all of the sales commission received on agribusiness (8%) listed in this issue in the form of a cheque. Wealth Focus will receive a 2% marketing commission on agribusiness investments and may receive a trailing commission of up to 1.00% pa. for managed funds, and 0.5%pa for margin loans, depending on the manager we have a relationship with. This trailing commission is paid by the fund manager and is NOT an additional charge to the investor. |
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This month, we have highlighted a number of investment opportunities for investors looking for returns in a falling market and cover some of the basics for end of year tax planning. |
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Cromwell (unlisted) Property Fund.
Favoured by many investors for their low volatility and tax deferred income, unlisted property funds have once again come to investor attention after they have continued to provide returns in a falling market.
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FEA Plantations Project 2008 (tax effective forestry)
There is an increasing gap between world supply and demand of timber coupled with the current tax incentives makes for a compelling investment
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Free Portfolio Healthcheck
Probably the worst thing you can do is sit on an portfolio full of proverbial "dogs" in the hope that they'll somehow get their act together and produce you the great returns overnight. We're giving investors the opportunity to get a free report across all their managed fund investments.
p13 |
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