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7/13
Financial Advice
End of the tax year tax tips
Neville Ward Advice
End of year planning from NW Advice
Andrew Reeve-Parker, Director of NW Advice, offers his end of year tax tips
Andrew Reeve-Parker
1.Salary Sacrifice
Direct a portion of your pre-tax salary to superannuation and pay tax at 15% as opposed to your marginal rate of tax which can be up to 46.5%, a potential saving of 31.5%. Sit back and watch the effects of compounding grow your retirement wealth.
Effective For: Workers who earn more than $30,000 and have an effective tax rate of 31.5%+
Trap: If you are under 50, ensure that your concessional contributions do not exceed $50,000 ($100,000 for 50-65)
Funds Focus Product Consideration: Self Managed Superannuation Fund
2. Pre-Pay Interest on Margin Loans
Margin loans can be an effective way to increase your exposure to growth assets and using a tax deduction to get ahead. Pre-paying interest upfront before June 30 allows you to bring forward a tax deduction in to this financial year.
Effective For: Anyone who is interested in growing their exposure to investment assets.
Trap:
Pre-paying interest locks you in for the 12 month term.
Funds Focus Product Consideration: NAB Margin Loan
3. Invest in Agribusiness to attain a     tax deduction
Investors are entitled to an upfront tax deduction whilst investing in an asset class which is not correlated to investment markets, thereby offering diversification in your asset base.
Effective For: High income earners
Trap: The investment term can be significant
Funds Focus Product Consideration: FEA Plantations
4.  Gear in to taxed deferred income      streams offered by property    trusts/investment property
Tax deferment is a significant tax effective strategy which can provide a positively geared loan. Gearing in to property trusts/investment property with high levels of tax deferment (generally stemming from depreciation of buildings) 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.
Effective For: Everyone
Trap: Tax deferment is not always known beforehand although company reports will give a good indication.
6. Utilise a discretionary trust to manage       your tax position better
Discretionary trusts were instigated by the Monks to protect Knights right to their land from the King in the event of their death on the battlefield. In addition to offering asset protection benefits, discretionary trusts are extremely effective at allowing investment income to be directed to the beneficiary which is in the best tax position to receive it. The increase in the low income earner's tax offset now means a minor can receive $2,667 tax free during FY09.
Effective For: Everyone
Trap: Trusts are required to lodge an annual tax return
7. Income Protection
Income protection pays you when you are unable to work (subject to satisfying the waiting period). The premiums are fully tax deductible.
The ABS reports that up to 1 million Australian's experience serious injury or illness which requires hospitalisation or prevents them from working every year.
Income protection keeps paying the mortgage, the cost of raising children etc when you can't .
Effective For: Workers
Trap:Salary Continuance policies generally offered by superannuation funds are not as comprehensive as Income Protection policies
Funds Focus Product Consideration: Zurich Ezicover
 
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NW Advice is an independently operated, non-aligned financial planning practice offering fee for service advice. Any opinion and recommendation within this newsletter by NW Advice are independent of our own views and should not in any way be construed as personal advice.
FUNDS FOCUS Investment newsletter: Issue 2, June 2008

7/13
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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.
 

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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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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