Are you using the right investment structures?
Review your business structure and personal assets, and where your investments are held. Some structures are able to take advantage of reduced or capped tax rates. For example, a company structure is capped at a 27.5% tax rate, which can make a big difference if your investments are generating significant income.
Make and document any trust resolutions
Prior to 30 June every year, the trustees of discretionary trusts are required to make and document their resolutions on how the income from the trust is distributed to its beneficiaries.
If a valid resolution isn’t executed by this date, any default beneficiaries become entitled to the trust’s income, and are subject to tax. For any income that’s derived, but not distributed by the trust, the trust will be assessed at the highest marginal tax rate on this income.
Take advantage of Early Stage Investment Companies
Investing in Early Stage Investment Companies (ESIC) allows you to take advantage of generous concessions. If you invest in a new company, the ESIC concessions entitle you to a 20% tax offset on the amount you invest. ESIC investments are also free from capital gains tax for a period of 10 years. So if you hold the investment for less than 10 years and you sell it, you won’t pay any additional tax.
Join an Early Stage Venture Capital Limited Partnership
This is similar to an ESIC structure, but is expanded to combine multiple investors. This type of investment allows you to gain a 10% tax offset on the amount of any investments made.
Take advantage of negative gearing on any investment properties
If the income you receive on your investment property is less than the expenses you pay to hold it, you can claim a tax deduction for this amount. However, be aware this strategy only works effectively when the underlying asset is increasing in value.
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