28 Jul 2020
Australian Taxation Office (ATO): Income Tax
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
The good news is that for the current financial year ending 30 June 2021 there will be no increase in taxation rates.
However, for those clients earning over $180,000 you will still be liable to pay 45% marginal rate of tax plus the 2% Medicare levy plus the 1.5% Medicare levy surcharge which adds to a total rate of 48.5%.
Minors (children under age 18) will still pay a 66% marginal rate of tax if their investment income is over $416 in the financial year.
The good news is that the company tax rate for business with turnover of less than $50 million has dropped from 27.5% to 26% and will further drop to 25% in the financial year ending 30 June 2022.
That is a win for the Australian economy.
Click for Facts & Figures.
These taxation rates should serve as a strong reminder for why taking advantage of your individual $1.6m total superannuation balance cap is so very important given that the maximum tax rate on earnings in superannuation is 15% which then drops to 0% when the money is rolled over into the pension phase of superannuation.
It is a categorical fact that the biggest cost to investing is taxation.
Consequently, an investment strategy that can help you reduce taxation (must be legal) should be used for its advantage provided that it is sound and likely to make profit.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.