There's a warning that sharemarket investors will hear at least once in their lives in some form or other - base decisions on investment merit, not on trying to save tax.
It's a maxim that has been put a more colourful way: Don't let the tax tail wag the investment dog.
Wise words; but don't wipe "tax" off the whiteboard just yet. It is still an important element to factor into your total investment outcome.
There are taxation consequences for everyone who earns assessable income, and that includes profits made from sharemarket investments (both from dividends and increases in market value that have been realised through share sales).
If you buy and then sell a parcel of shares and they have gone up in price, you will make a capital gain - and tax will usually have to be paid on this gain.
And, if in the interim, you have received dividends on those shares (your share of the company's profits), there may also be tax to pay. However the amount of tax payable (or refundable) depends on how much tax, if any, the issuing company has already paid on the underlying profits from which the dividends are paid â€" that is, whether they are unfranked, partly or fully franked dividends.
It's pretty straightforward really, yet few firms get it right.
Whether you're starting out or thinking about taking life a bit easier, reducing tax should never be your primary objective. You should be focussed on generating more wealth, either whilst you're working or even in retirement... when it comes to making the most of tax planning, GJB knows of a few options! Call us on 02 9686 3130 or visit Your SELF to find out more.
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