What do you do to save tax and grow income.

Thought I would put it out there to see the most creative and consistent ways people save on tax. Could be anything from tax advice, setting up a company/trust, buying assets that depreciate, buying shares with franked dividends.

Could be simply giving credit to the tax and legal advice you have received from people on here that has helped you grow as a person.

It could be getting advice from your mentor and where you turn to, to seek financial advice. Or what impacts your purchasing decisions.

Where do you go to search for businesses with the best yield?
Could be a great broker with the correct structures of which many are on here.

With the aim of adding an income stream each year, what has been your best passive income growth this year?

I plan to look at adding a self storage business to my portfolio and I am currently doing due diligence on established vs setting up my own.

Wealth creates wealth. The more we help others become wealthy the more enriched all our lives become, the more money there is to share amongst us all.

 

Credit to @Terry_w also for his fantastic tax tips

Terry's Tax Tips

 

A good start would be using a savvy accountant, not the garden variety

 

USA property each year since 2011, can pretty much throw a dart, lower end markets for cash flow and growth

 

One advanced strategy is to use family members as tax havens - ideally family members who rent and do not own property.

 

I think your tips on spousal transfers fit that category, or assume that is part of what you are alluding to. Assets held in wife’s name (she does not do paid work) for asset protection purposes, but she lends money to very high MTR husband for investment purposes.

 

What about uncles and aunties - and super even.

 

I am keen to learn how people started without a trust.

In my case I am a high income earner and wife does not work. PPOR paid off and we have $$'s saved up. Yes - we are a classic example of middle class.

Now looking to invest and ALWAYS hit a wall when it comes to structure. The accountants have a vew (yes expensive fees to maintain trusts and all the usual spin on protection). I don't need protection ... what I need is an effective tax minimization strategy aligned with our real estate acquisition process.

Open to ideas/ comments/ thoughts.

 

Other than buying the next property 100% in your wife's name for the next one you may need to consider some structuring.

If it is the 'usual spin' why are so many qualified accountants saying to do so?

Couple of grand to set up the correct structure and a grand a year to run it vs opportunity cost of $xxx.

You need to contemplate what you want to achieve, and what that will look like in time, then the additional 'spin' accounting costs can be weighed up against not utilising any structuring when and if you are looking to liquidate those assets/retirement/pension/children etc.

Until then:
1. Structure advice is irrelevant
2. You shouldn't move forward
3. Start planning!

 

Unit Trust, Disc Trust and SMSF are all trusts with very different issues.

 

I specialise in structuring and it doesn't have to be complex or costly. You could, for example, buy in your wife's name and just pay this off asap and/or fill up the offset account with cash.
But do get legal advice on all the issues.

 

@Switchtronics & @hillsguy, providing there's an investment timeline of at least 10 years, investment bonds as security for property can be a good tax effective combination for some people.

And of course there's always SMSF....

 

For older people, Transition to Retirement can be easy, cost nothing to implement and will be lucrative to the tune of 30 or 40% of taxable income up to the $25K maximum tax free contribution limit.

Terry will correct me if I forgot anything.

 

It is possible to do this several times in jurisdictions which permit polygamy or the female equivalent.

 

You can do it anywhere. Just keep buying properties in other people's names - just make sure the estate planning side is covered.

 

So Straw directors, bottom of the harbour, trawling nursing homes for warm corpses etc ring a bell?

 

no, real people

 

We started as income earners, then progressed to small business hence was suggested to set up family trust. It is not just for protection but profit must be distributed each year to beneficiaries, a useful strategy if you have many teenagers at UNI, or family members! You then just need extra accounting and lawyer stuff such as Deed of Forgiveness or Assignment if you will keep the distributions so they don't come back and ask for it one day!
Other strategies is to lend to SMSF, for sophisticated investments OR to lend your equity from your PPOR to your SMSF as LRBA and invest more into property in SMSF (more complicated and need to know what you are doing to be truly diversified!), donating to charities, setting up businesses and distributing from Trusts to Trusts.
Also investing in various entities by having access to sophisticated investments helps (net worth and income restrictions must be met before a person can be classified a sophisticated investor) but only if you are in eligible position and have friends that can provide those opportunities to do that BUT it is also risky!
Other strategies are estate planning, it is not sufficient to just build wealth if it is not protected, yet many don't realise this, setting up reserves, having BDN, encompassing the trusts!
Spreading investments interstate for minimisation of land tax, buying in trusts and then changing ownership to family members, lending them funds, helping them now rather than through estate planning when you die, diversifying income by running your own businesses, these help in small way.
I personally like to invest small portion into some collectibles each year, and starting the young ones in the family to eventually teach them about compound growth.
I read once that we should be grateful if we pay more tax, the more you pay the more you make, the more you can give away, what a nice problem to have....?

 

Dont mind share some info on what sophisticated investments are?

 

What is an investment bond as SECURITY for property in the context of investment? Please explain