Are you taking advantage of Australia’s only On-Shore Tax Haven?

 

There are several definitions of tax havens. The Economist has tentatively adopted the description by Geoffrey Colin Powell (former economic adviser to Jersey):

“[What] identifies an area as a tax haven is the existence of a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance.”

 

Well, I am not going to advocate any ‘tax avoidance’ schemes here, but did you realise that the Australian Government has a ‘tax structure’ which has indeed met the criteria of allowing all Australian Tax Payers ‘to take advantage of and exploit opportunities’  to minimise tax at least? That structure is of course Superannuation.

 

For those taxpayers in the know, superannuation can be a ticket to financial freedom as well as a ‘storehouse’ for income producing assets, where the tax on income can be as low as nil and only ever a top rate of 15%.  Below is a simple comparison of the differences in tax levels for some common investment income types in Super, as compared to other common structures:

 

Individual
47% Tax
Company
30% Tax
Super Fund
Accumulation Phase
15% Tax
 Super Fund
Pension Phase
0% Tax
$1000 Interest Income $ 470 $ 300 $ 150 $ NIL
$15,000 Net Rent 7,050 4,500 2,250 NIL
$100,000 Capital Gain 23,500 30,000 10,000 NIL
$10,000 F/F Dividends 2,429 NIL Refund ( 2,143) Refund ( 4,285)

 

And the benefits of zero tax rates in pension phase are available to you while you are still working once you reach 55 years of age!

 

Now that is a Tax Haven worth looking into!