If you are currently preparing your annual tax return and have discovered you owe more than expected to the tax man, it may be the right time to call in a financial advisor. Below is a guide to 4 ways a financial advisor can help you to reduce your tax bill.
Optimisation of Debt
Some forms of debt which have interest payments, such as that which is used for investment purposes such as a mortgage for an investment property or a margin loan which is part of a share portfolio, can be used as tax deductible items on your tax return. A financial advisor will be able to help you to structure your debts so as to minimise the overall valuation of your tax bill.
Planning your Financial Future
Australian capital gains tax will only apply to any investments which you hold for less than a tax year. By working with an advisor, you can help to plan your financial future so that you can make sure that your taxable income and cash flow are operating at a level which is suitable to your needs and that you do not pay any more tax than is strictly required.
Optimisation of Superannuation Contributions
A financial advisor will be able to offer their option as to whether you should increase the value of any contributions you are making to your superannuation fund. These contributions are tax-free and so will help to cut your annual tax bill. When you are over the age of 60, you will be able to withdraw funds from your superannuation fund without incurring a tax penalty.
Investing in a Tax Effective Way
When a company you have shares in has paid out the tax owed on any invested funds, they will usually pay out what a called 'franked' dividends. These 'franked' dividends mean that you receive a tax credit which is equal to the company share which is typically 30%. For example, it may make more sense to invest in shares in your bank rather than keeping money in a savings account. A financial advisor will be able to help you to assess the risk and benefits of these investments and will help you to invest in a tax effective way.
If you would like further information about how you can reduce your annual tax bill, you should contact a professional financial advisor who will be able to offer further help and advice.