Structuring assets forms part of the tax effective strategies utilised to grow wealth

At 24kWealth, one of our expert advisors work with our partnership of associated professionals including your accountant and lawyer, to guide you through the complex task of deciding where to hold your assets as you build your personal wealth.

Choosing a tax efficient structure is essential to maximising the financial returns you receive from your assets and investments.

Starting early and getting the timing right is the order of the day here because making changes when asset values are high can be an expensive exercise. Generally, the more valuable an asset is, the more costly it will be to restructure that asset down the track.

Establishing an efficient structure, when asset values are low or when markets are depressed, can help to ensure you derive efficient gains when values rise in the future.

Your advisor can advise you whether to hold your investments under a trust structure, where you may be able to access a 50% Capital Gains Tax Discount when you decide to cash out, or stream and share income among multiple beneficiaries, accessing their different tax rates from year to year.

Or perhaps your advisor will tell you that your assets should be held in a company structure, either for asset protection purposes, or to enable reinvestment of returns at a fixed company tax rate.

While not eligible for a Capital Gains Tax discount, a company does benefit from a tax rate that is limited to 30%. This could be worthwhile if your investment is giving you significant returns and income each year.  However, this is something you will need to seek advice about as it may have other implications for your arrangements.

Remember, our goal for you is focused on wealth accumulation so tax effective strategies that grow your personal wealth are given paramount consideration. That’s why it is important to work with professionals who understand how this works and can guide you through the pitfalls.

There is definitely no ‘one size fits all’ strategy, as each structure is relative to your individual situation. Nevertheless, structuring your assets to benefit your circumstances should be one of the first things you consider when thinking through tax effective strategies.

Tax offsets

A tax offset is an amount given to reduce your tax based on allowable costs. Tax offsets are given for a variety of reasons such as low income or business losses.

Low income earners are eligible for a Low-Income Tax Offset, in which the government allows you to offset an amount against your tax, putting more dollars into your pocket for personal living expenses. It is not much but for those whose incomes fall below the threshold, the allowable tax offset could be the difference between having a roof over their head and not.

At the other end of the scale, if you are a high net worth individual with revenue losses in a trust or company, you might be able to take advantage of those losses by structuring your affairs in a particular way. 24kWealth financial advisors will work with your tax advisors to assist you to structure your assets to allow you to offset your losses in a way that reduces your tax liability.