When building wealth, investment returns are only part of the equation. The tax you pay on those returns can significantly impact your long-term outcomes. Understanding tax-efficient investing strategies can help you grow your wealth while keeping more of your earnings.
At MLS Financial, we regularly help clients in Penrith structure their investments in ways that support both performance and tax efficiency. A well-planned investment strategy considers not only what you invest in, but how and where those investments are held.
What Is Tax-Efficient Investing?
Tax-efficient investing involves structuring your investments to legally minimise the amount of tax you pay on income and capital gains. This can improve overall investment returns and help your wealth grow faster over time.
Different investments and ownership structures can attract different tax treatment, making planning an important part of any long-term strategy.
Using Superannuation as a Tax-Effective Environment
Superannuation is one of the most tax-effective investment structures available in Australia.
Some key tax advantages include:
- Investment earnings inside super are generally taxed at 15%, which is often lower than personal tax rates.
- Capital gains on assets held longer than 12 months may receive additional tax concessions.
- Once in retirement phase, investment earnings may become tax-free, subject to legislative limits.
Strategic contributions to super, such as salary sacrifice or personal deductible contributions, can also help reduce taxable income while boosting retirement savings.
Managing Capital Gains
Capital gains tax (CGT) applies when you sell an investment asset such as shares, managed funds, or property.
Tax-efficient strategies may include:
- Holding investments for longer than 12 months to access CGT discounts
- Timing the sale of assets in lower income years
- Offsetting capital gains with capital losses
- Structuring investments across different ownership entities
Careful planning around asset sales can help reduce unnecessary tax and improve overall investment outcomes.
Investment Ownership Structures
The way investments are owned can influence how income and gains are taxed. Common structures include:
Individual Ownership
- Simple and flexible but taxed at personal marginal tax rates.
Joint Ownership
- Allows income to be split between partners, which may improve tax efficiency.
Family Trusts
- Can provide flexibility to distribute investment income to family members in lower tax brackets.
Superannuation Structures
- Offers concessional tax treatment but may restrict access to funds until retirement.
Choosing the right structure depends on your income, goals, family circumstances and long-term plans.
The Importance of Diversification
Tax-efficient investing isn’t just about reducing tax — it’s about balancing tax outcomes with investment performance and risk management.
A diversified portfolio across asset classes such as shares, fixed interest, property, and cash can provide:
- More stable long-term returns
- Reduced reliance on one asset type
- Greater flexibility when managing tax outcomes
How MLS Financial Can Help
Tax rules and investment structures can be complex, and strategies that suit one person may not be appropriate for another.
At MLS Financial, we help clients:
- Adjust strategies as tax laws and personal circumstances change
- Structure investment portfolios tax effectively
- Develop super contribution strategies
- Manage capital gains and income streams
- Align investment strategies with long-term goals
Written by:
Adrian Guy – BBus (Finance & Economics), MLS Financial
Disclaimer:
This information is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider speaking to a qualified financial planner before making any financial decisions. MLS Financial and Infocus Securities Australia Pty Ltd do not accept responsibility for actions taken based on this content.