We often get asked by our clients: What should I do to minimise tax? Do I purchase an investment property or buy shares? What structure do I invest under for long term wealth creation, for my retirement and to gift to family members?

The short answer is there is no one size fits all. It requires thorough planning and consideration of your current financial circumstances as well as your long-term objectives. The best way to demonstrate this is by taking a look at a hypothetical case.

Romeo & Juliet – All you can eat Sushi pub

Romeo & Juliet (R & J), husband and wife own “All You Can Eat Sushi pub” and they have three young children. The business has been profitable for five consecutive years with strong cash flow, and the future budget forecast indicates that the business will grow by another 20%.

R & J approached their Accountant with the business projection plan and discussed their desire to buy a commercial property so they could open another sushi pub store. R & J advised that they didn’t want to be locked up in debt as they are very happy with their current financial arrangements and are enjoying a comfortable lifestyle. R & J’s business has been contributing the maximum superannuation contributions each year into the R & J Super Fund (the couples own self-managed super fund). R & J thought that by maximising their super contribution each year it would help them save some company tax, as well as building their retirement fund.

They always said, “it is not my money yet until retirement, don’t touch it!” Fortunately, their Accountant referred R & J to an experienced Financial Planner a number of years ago to help them manage their SMSF investment portfolio. With the advisers help the value of the Fund has now increased from $300,000 to $500,000. R & J were surprised by how those small ongoing super contributions not only saved them tax but how quickly the funds accumulated in the SMSF.

By the accountant, the financial adviser and the client working together they were able to develop a strategy to build wealth, without sacrificing the family’s lifestyle or missing business opportunities. R & J were able to achieve their goal of purchasing a commercial property using their SMSF assets, freeing up the business cashflow to further expand their business. More importantly, they have learnt how holding the investment asset under an SMSF not only protects their family wealth but also provides a better tax environment.

Does this sound like you?

Don’t underestimate the importance of those small ongoing super contributions! When the time is right, you can use it to build wealth in a variety of ways. Let’s agree to this “we all want to be “Super” wealthy, in as short a time as possible, while also paying minimal tax bill”. Correct?

What is the take away?

• Don’t rush into any investment decision until you have sought professional advice;
• Think about what the most appropriate investment structure is to achieve the best outcome, including asset protection and tax savings, for you and your family members – not just in the short term but also the long-term plan;
• Draw a timeline of your proposed investment plan and bring your financials up-to-date for real time decision making;
• Discuss your proposal with a trusted adviser who can think outside the square and can support you to ensure that you arrive at your desired final destination;
• Don’t overlook that powerful vehicle, “Superannuation”, as it can help you create long term wealth in the most tax effective environment.

Still have questions and need help?

Please feel free to get in touch with one of our advisors to find out how we can assist you in this area.