Category Archives: Guest Post

The Most Tax Efficient Investments in Australia

Today I have a guest post from Richard at PF Australia. PF Australia is a financial resource for low income earners looking for practical information on how to better manage their money in Australia. It’s a place to learn about effective ways to control debt, establish savings and get ahead financially.

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As in most countries there are numerous mainstream investment options such as, shares, property, cash, term deposits, etc. and any healthy investment portfolio should have diversity across the board.

Investing in Australia is no different however there are a few investments that allow you to pay little to no tax on your investment. Is there a catch? Of course there is but it is minimal and probably for your own good as it is “time”. The catch is how long you have to be invested before accessing these funds and one option is quicker than the other.

Below are the two tax efficient investment options in Oz.

The first is a bond

This is a great option for investing for your child’s future. Establishing an account when they are born or an infant can go a long ways in covering future costs such as education, car, travel, wedding and more. Bonds are also great options for those who want to diversify their investment portfolio and avoid paying tax. Depending on the bond you go with, returns can range from 5-10%. The big attraction to bonds belong the competitive return is the tax benefit as mentioned before.

With certain bonds, no tax is payable on withdrawals where you have had the investment for 10 or more years. As some investments should be looked at as a long term commitment, this is the best of both worlds as it is medium term and avoids tax!

The second is Superannuation (retirement)

Super is another great investment which also allows for certain tax breaks. There are multiple benefits attached to super depending on your salary. Low income earners can receive certain benefits such as the government co-contribution scheme which is a boost to the bottom line is also not taxed.

The big benefit for Australians on a good or great wage who want to top up their super, is that if you salary sacrifice into super, you are only taxed up to 15% instead of up to 45% depending on your income. As you can see this is a great way to super charge your retirement and pay minimal tax.

The obvious down side of the tax advantage via super is the length of time you have to wait until you can access the cash – but then again certain investments are for the long term and this will allow for a more comfortable living in your retirement years.

The above are two of the most tax efficient ways to invest in Australia with one being mid to long term and the other being long term. Understanding your investing options will allow you to have diversity in your investment portfolio and add another brick to your hopefully solid financial future.

Hope you enjoyed.