Take the easy wins first

TL;DR

Learn how to reduce your taxable income through strategies like salary sacrifice and prioritize investments in superannuation over negatively geared residential properties.

Transcript

today and welcome to this week's video this week we're going to look at some of the strategies that people use to reduce their taxable income and therefore ultimately reduce the amount of tax that they pay and that's something that we all want to do as you know once we pay that tax to the government it's not coming back so reducing your tax smartly... Read More

Key Insights

• 🚕 Salary sacrifice into superannuation can provide substantial tax savings, especially for individuals in the 39% tax bracket.
• ⌛ Negatively geared properties may reduce taxable income, but the strategy relies on the property value appreciating over time.
• 🦸 Prioritizing super contributions can offer long-term growth opportunities and diversification compared to investing heavily in one asset.
• 😄 The ease of tax wins through super contributions should not be overlooked, especially when compared to borrowing substantial amounts for investments.
• 💨 Consider the risks involved in borrowing and invest in a way that minimizes the potential impact of market downturns.
• 🍉 Superannuation contributions can outperform paying off non-tax deductible home loans in terms of tax savings and long-term growth potential.
• 🖤 Diversification is important to mitigate risk, and relying solely on negatively geared properties may lack the necessary diversification.

Questions & Answers

Q: What is the advantage of salary sacrifice and contributing to superannuation?

By salary sacrificing into super, individuals can make concessional contributions and only pay 15 cents on the dollar, resulting in potential tax savings of up to 24%.

Q: Why is investing in superannuation considered a safer strategy compared to negatively geared residential properties?

Superannuation offers diversification and potential long-term growth through returns and compounding interest, whereas property investments may carry higher risks and depend on the property market's performance.

Q: Should people prioritize paying off their home loan or contributing to super?

From a tax perspective, contributing to super and taking advantage of the 24% tax savings can be more beneficial than paying off a non-tax deductible home loan with after-tax dollars.

Q: Is borrowing money for investments a recommended strategy?

While borrowing can be beneficial, it's important to consider the risks involved and avoid overexposing oneself to a downturn in the property or share markets.

Summary & Key Takeaways

• By using salary sacrifice and contributing to superannuation, individuals can reduce their taxable income and take advantage of the 15% tax rate on super contributions.

• While negatively geared residential properties can also reduce taxable income, it is important to consider the potential risks and lack of diversification.

• Focusing on easy tax wins like super contributions can provide significant tax savings and long-term growth opportunities.