Tax-effective investing, sized to your marginal rate.
Most tax-effective investing in Australia gets sold one structure at a time. They only earn their keep when sized against your full picture: income, debt, super cap, family situation, horizon.
The structure follows the strategy.
Tax-effective investing is not a separate product. It is what happens when the right structure holds the right asset for your marginal rate and your horizon. Get the order wrong and the structure costs more than it saves.
For high-income households the order usually goes: fill the super concessional cap (covered on the superannuation advice page), consider salary sacrifice and deductible insurance, then look at structures outside super if there is still capital to deploy. The financial planning pillar page sets out how the pieces fit together.
Six structures we use, and when.
None of these is a product pitch. Each fits a particular cash-flow and marginal-rate profile. We will tell you when one does not fit yours.
Franking credits
Australian shares carrying fully franked dividends suit pension-phase and lower-marginal-rate portfolios. The credit is refundable to the right investor.
Negative gearing
Borrowing to invest where deductible interest exceeds income. Useful at higher marginal rates with a long horizon. Not a substitute for capital growth.
Salary sacrifice into super
Concessional contributions taxed at 15% inside super. The cheapest tax shelter available to most employees, capped annually.
Family discretionary trust
Income split across adult family members on lower marginal rates. Works for trading entities and passive investments. The trustee and distribution decisions are deliberate.
Investment bonds
Tax paid inside the bond at the company rate. Tax-free in the holder's hands after ten years. Useful for education funding and high-income earners.
SMSF structure
Direct property, niche assets, and pension flexibility for the right balance. Higher cost, higher control, and the trustee duties are real.
The trap: optimising tax without an investment thesis.
The most expensive mistakes we see are deductible by design. A negatively geared property bought for the tax deduction, then held through a flat decade. A family trust set up for distribution flexibility that ends up distributing capital losses. The tax tail wags the investment dog.
Our default sequence is investment thesis first, structure second. If the underlying asset will not grow or pay income on its own merits, no structure rescues it. For direct-property exposure inside super, the same practitioner writes the SMSF advice and lending; for borrowed investment outside super, repayments can be sized against the investment loan calculator.
- Marginal tax rate now
- Expected rate at exit
- Income vs growth weighting
- Family member rates
- Holding period
- Estate planning intent
Frequently asked questions.
Where the marginal rate is high and the property has credible long-term growth, negative gearing can compress the holding cost. The tax outcome is one input. If the underlying asset does not grow, the strategy loses money in slow motion.
Sometimes. A trust costs money to run and the distribution decisions need to be made each year. It tends to suit business owners and households with adult children on lower marginal rates. We work through whether the saving exceeds the running cost.
Both are taxed broadly the same way as listed shares: income and capital gains. The question for the plan is whether they fit your risk profile and the overall asset allocation, not whether they are fashionable.
Tax-effective investing sits at the join between financial planning and tax. We coordinate with your accountant rather than replace them. If you do not have one, we can point you to a few we work with.
Continue reading
- Financial planning overviewThe pillar page. How a Statement of Advice is delivered.
- Superannuation adviceSalary sacrifice and the cheapest tax shelter available.
- Debt managementDeductible vs non-deductible debt and repayment order.
- SMSF advice and lendingWhen an SMSF earns the running cost.
- Retirement planningWhere franking and tax-free pension fit.
Information on this page is general in nature. It does not take into account your personal objectives, financial situation, or needs. Read the relevant Product Disclosure Statement and consider whether personal advice is appropriate before acting on any information here.
Get your investment structure reviewed.
An initial conversation is free and obligation-free. Bring last year's tax return and we will work through where the structure earns its keep.