Tax Tips and Traps

Wednesday, August 31, 2011

Tax Tips and Traps

If you and your spouse are wages and salary earners, you can still split some income legally and save thousands of your combined tax bill over time :
Investment income is added to wages income and attracts marginal tax rates. Therefore, investments which generate positive returns should be in the name of the spouse with the lowest taxable income.
If you consider purchasing a negatively geared investment, which is expected to make tax losses for a number of years, consider allocating the ownership to the spouse with the highest income to claim the deduction at the highest marginal tax rate. You don't have to own properties or shares on a 50/50 basis.
If your investments are extensive or your incomes fluctuate over the years, consider using a discretionary family trust which allows you to vary the distributions among the members from year to year.
You can save thousands of dollars over the life of your investments. Remember that ownership for tax purposes must be the same as legal ownership, so getting the contract right when you buy investments is vital ! For best tax results talk to us before buying any investments.

Information supplied by:
Taylor & Co

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