Tax Planning

Overview

Tax planning in the context of financial advice is not about tax returns. It is about the structural decisions that determine how much tax is paid on investment income, capital gains, and superannuation over a working life and into retirement. The decisions made about where to hold assets, how to structure contributions, when to realise gains, and how to draw income in retirement have compounding consequences over time. Peter White Financial Planning advises on these decisions as part of an integrated financial plan.

Details

Peter operates from Level 57, 25 Martin Place, Sydney CBD, holds a Master of Applied Finance, and has 25 years of experience in financial services. He coordinates with the client's accountant to ensure tax planning advice sits within the broader legal and compliance framework.

Additional Information

Superannuation is the most tax-effective savings structure available to the majority of Australians. Concessional contributions are taxed at 15% on entry rather than at the contributor's marginal rate, which can be as high as 47% for high-income earners. Investment earnings inside a superannuation fund in accumulation phase are taxed at 15%. In pension phase, investment earnings are tax-free.

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The concessional contribution cap, currently $30,000 per financial year, limits how much can be contributed at the concessional rate. Carry-forward provisions allow individuals whose super balance is below $500,000 to access unused cap amounts from previous years, enabling larger deductible contributions in years when cash flow permits. Non-concessional contributions allow after-tax money to be added to super within separate caps, and the bring-forward rule allows eligible individuals to contribute up to three years of non-concessional cap in a single year.

Where We Operate

Where assets are held outside superannuation, the choice of investment structure affects the tax rate on income and capital gains. Assets held personally are taxed at the individual's marginal rate. Assets held in a family trust can be distributed to beneficiaries in lower tax brackets. Each structure has different implications for the 50% capital gains tax discount and the ability to stream income to different beneficiaries.

Overview

Australia's dividend imputation system allows investors in Australian shares to receive a credit for the corporate tax already paid on dividends. For investors in zero or low tax environments such as super pension phase, these franking credits generate a cash refund from the ATO. Peter factors franking credit optimisation into portfolio construction decisions.

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Frequently Asked Questions

Tax Planning5

The most effective legitimate strategies include maximising concessional superannuation contributions to redirect income from your marginal tax rate to the 15% superannuation tax rate, holding growth assets inside superannuation where capital gains are taxed at 10% or zero in pension phase, using the 50% CGT discount for assets held longer than 12 months, optimising the mix of Australian shares to capture franking credits, and selecting appropriate investment structures for assets held outside super.

Salary sacrifice is an arrangement with an employer to redirect a portion of pre-tax salary into superannuation as an additional concessional contribution. The amount sacrificed is taxed at 15% inside super rather than at the individual's marginal income tax rate. For someone on a 39% marginal rate, salary sacrifice saves 24 cents in tax for every dollar contributed. The maximum concessional contribution from all sources is $30,000 per financial year, and carry-forward provisions allow catch-up contributions for those with super balances below $500,000.

Division 293 is an additional 15% tax on concessional superannuation contributions for individuals whose income exceeds $250,000 in a financial year. It effectively doubles the tax rate on concessional contributions from 15% to 30%, reducing but not eliminating the advantage of salary sacrifice. Whether the contribution strategy still makes sense at this income level depends on the client's overall tax position. Peter White advises on the optimal contribution approach for high-income clients subject to Division 293.

Individuals with a total superannuation balance below $500,000 at the end of the previous financial year can access unused concessional contribution cap amounts from up to five prior years. This allows a larger concessional contribution in a year when financial circumstances permit, for example following a business sale or inheritance. The carry-forward provisions are particularly valuable for people who had interruptions to employment or lower income in prior years.

Australian companies pay corporate tax on their profits before distributing dividends. Shareholders receive a franking credit representing the tax already paid, which can be offset against their own tax liability. In pension phase, a superannuation fund pays zero tax on investment earnings, which means franking credits generate a direct cash refund from the ATO. This makes Australian dividend-paying shares particularly valuable to retirees drawing a pension from superannuation.