END OF YEAR TAX TIPS

It’s never too early to start planning for the end of the tax year. The most effective strategies are often the simplest and
can be applied anytime before 30 June – sometimes the earlier the better. Please take the time now to consider the
following strategies and how they might work for you:

• Make sure you hold assets in the most appropriate tax structure. Individuals, companies, trusts and super
  funds are all taxed differently on their capital gains and income.
• Use franking credits to reduce tax on lower taxed entities like super funds and lower income earners.
  Remember that excess franking credits are refundable.
• Income split wherever possible to take advantage of the progressive tax system.
• Ensure you get capital gains tax concessions by holding assets for more than 12 months.
• Review income distributions from family trusts. You can lose franking credits in some circumstances if a
  family trust election is not made.
• Defer non-essential income until the new financial year.
• Review your investment portfolio to determine whether investments should be sold to offset any capital gains
  or losses made throughout the year.
• Maximise tax deductions through super contributions. Alternatively, make a contribution into super for your
  spouse – this could provide you with a tax offset.
• Borrow to invest through home equity loans, margin lending or protected equity loans and pre-pay the interest.
  

Take care with “tax-effective” investments

One of the golden rules when considering any investment is to focus on the quality and prospects of the assets and treat
any tax advantage as a bonus. The message in some end-of-year product marketing is that the tax deductions are all
that matter. The long-term prospects of some “tax-effective” schemes are uncertain. The investments are usually illiquid
and can have high fees but with potentially excellent returns. Please take note of your financial planner’s
recommendations in this sector and the research reports to support that.

In an ever-changing and complex world, seeking professional financial advice will help you through the maze. We invite
you to contact us to explore all your individual 2010 tax planning opportunities further... but please don’t leave it until the
last minute.