Maximise Your Wealth with Planning

Are you looking for ways to maximise your wealth? With the right planning, you can create a successful financial future and achieve real economic stability. Planning ahead is the key to unlocking your financial potential, as it allows you to take charge of your finances and make decisions that will benefit your long-term goals. The article provides helpful tips and advice on how to create an effective plan that will help you build and maintain wealth over time.

Step 1: Set Goals

Maximising your wealth requires planning and setting goals for yourself. Achieving success doesn’t happen overnight; instead, it comes from a series of small steps that you take to reach your financial goals. To maximize your wealth, start by assessing where you are now and where you want to be in the future. Once you know what your long-term vision is, break that down into more manageable short-term objectives so that progress can be measured along the way.

Creating a plan helps ensure that all areas of personal finance are identified and addressed. Setting clear objectives can help focus on the most important areas first and provide guidance for making decisions about investments or spending habits in order to meet those goals. Keeping track of accomplishments will give motivation to continue working towards greater financial stability over time.

Step 2: Assess Resources

Planning is key to maximise your wealth. By assessing your resources and setting reasonable goals, you can take steps to improve your financial situation and make the most out of what you have. An effective financial plan begins with an honest assessment of both your income and expenses. Additionally, consider any current debts or investments that may be impacting your bottom line. A good way to start is by creating a budget that prioritizes important spending areas such as savings, retirement, medical costs, and insurance premiums.

Step 3: Create a Budget

Maximizing one’s wealth starts with creating a budget. Creating a budget is the first step to successful financial planning and it can help individuals to stay organized, on track, and reach their goals. Whether you are just starting out or have been managing your finances for some time, setting up a budget is an easy way to make sure you have enough money for the things that matter most.

In order to create an effective budget, it’s important to track income and expenses so that spending habits can be monitored over time. This includes recording all sources of income (such as wages or investments), listing out all expenses (including rent/mortgage payments, utilities, groceries), and determining how much money is left over each month after these costs are accounted for. Once this information has been compiled, individuals should set realistic goals in order to prioritize spending and save for the future.

Step 4: Invest Wisely

Maximising one’s wealth can be a hard task, but with the right planning, it can be done. The key to making sure that your money is well managed is to invest wisely. Taking the time to do research and understand which investments are most likely to yield positive returns will help you realize your financial goals more quickly. When it comes to managing your own wealth and achieving greater financial stability, proper planning is essential.

Step 5: Track Progress

Maximising your wealth is an important goal for any individual. One of the best and most reliable methods to achieve this goal is through planning. Planning allows you to track progress, set achievable goals, and create a strategy that will help you stay on top of your finances.

One of the most effective ways to maximise wealth with planning is by tracking progress over time. This can be done through budgeting, monitoring spending habits, and setting long-term financial goals. By tracking progress over time, it’s easier to identify areas where money can be saved or invested more wisely. Additionally, tracking progress makes it easier to identify if changes need to be made in order for financial goals to be achieved faster and more efficiently.

Overall, planning is a great way for individuals to maximise their wealth over time.

Take Action Today

Proper planning is essential to managing and maximising your wealth. Through careful consideration, you can create a financial plan that meets your short-term and long-term goals. Take the time to research, assess your needs and objectives, and compare all of your options before selecting a plan. Working with a trusted financial advisor may also be beneficial in helping ensure that you make the best decision for your future. By taking these steps, you can create an effective plan for achieving financial success. Get in touch with Impact Taxation and Financial Services today to learn how you can Maximise Your Wealth.


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10 things you should consider before buying a property

Are you considering buying a property? Do you know you could miss opportunities to save thousands, or tens of thousands of dollars if you don’t plan well before the purchase?

Below are a few key considerations:

1. How should you set up your loan structure? If you don’t have a loan offset account for a rental property, after you make extra payments directly to the loan account, you can only claim interest deduction on the remaining balance of the loan. For tax purposes, this deductible balance can’t be changed even if you redraw the overpaid amount later. A good loan structure could also help you to stabilize interest rate and speed up loan repayment by combining a standard variable loan (with an offset account) and a fix rates account.

2. Timing of renovation. You might want to do a renovation right after you have bought the rental property. But do you know for any genuine repair & maintenance included in the renovation, you can claim an outright deduction against the rental income when the property is available for rental? If the work is done before the date when the property is available for rental, you can only claim the deduction against future capital gain when the property is sold. Depend on when you are going to sell, it could take years or up to decades before you can claim the deduction.

3. How should you split ownership? You might want to share the property ownership with a family member. For tax purposes, the percentage of ownership is based on the legal title, regardless of who is paying more on the mortgage. If the property will give you a tax profit, you might want to allocate more
ownership to the low-income earner to utilize the lower marginal tax rate. If it is giving you a tax loss, you might want to allocate more ownership to the high-income earner to utilize the loss. The goal is for the family to pay minimum tax together.

4. Should you use a family trust to purchase the property? There are many pros and cons related to a family trust. The advantages include tax savings on rental profit or capital gain, asset protection and succession planning on family wealth. However, family trust can’t distribute losses. All losses are trapped in the trust to be used to offset future trust profit. Therefore, you can’t utilize any rental loss in a trust to offset other income such as salary & wages. Family trusts also attract high accounting fees on initial setup and annual fees on financial statements and tax returns. State governments also charge much higher land tax on family trusts.

5. Will the income level change in future years for different owners? You might want to forecast the possible income for different owners to understand total tax payment / savings related to the property. This could also impact on your decision making on point 3 and 4 above.

6. Understand when you can treat your property as main residence to receive an exemption on capital gains tax. When eligible, even if you have received rental income, you could still treat your rental property as main residence and receive the exemption. To be eligible, you will need to treat it as your main residence at the beginning. Please check out this ATO link: Treating former home as main residence.

7. Decide whether you need to purchase a depreciation report. Most taxpayers don’t know that the depreciation on the building will need to be added back to calculate capital gains tax when the property is sold. When the property is held for more than 12 months, after applying the capital gains tax discount of 50%, it will effectively cut the tax rate by half at the time of sales. This makes depreciation deductions desirable for high income earners. However, for low-income earners it might not be ideal to claim depreciation as a rental deduction since they could be paying more on capital gains tax in the future. It could get more complicated if the property is under joint ownership between high and low income earners.

8. You might want to consider Centrelink payments for future or existing owners. Most Centrelink payments are income and asset tested. Before attaching a rental property to a family member who is receiving, or plan to receive government benefits, you might want to check the testing thresholds first to see if the Centrelink payment will be impacted. This is also applicable when you are making distributions from a family trust to different family members.

9. Have you considered using your SMSF (selfmanaged super fund) to make the purchase of a rental property? There are a lot of tax saving opportunities with a SMSF since the income tax rate is only 15%. And the capital gains tax rate is effectively only 10% after factoring in the 1/3 discount. The major downside with a SMSF is normally you can’t get the money out until you retire or on compassionate grounds (SMSF does have more flexibilities compared to normal retail super fund. But the choices are still very limited). It could be expensive to set up and operate a SMSF too. There are also strict legal requirements on the trustees. Penalties on incompliance could be severe. Tax law around SMSF is very complicated too. You will need to find a good tax accountant specialized in SMSF to help you to understand the structure, also do a cost-benefit analysis before setting it up.

10. Consider internal ownership changes. For your existing rental properties, you can also consider whether you should transfer the ownership between family members, or between different business structures (this is not applicable for SMSF). You might want to do this when the income level changes with family members, or rental property changes between tax profit and loss. Before the change, you need to consider the cost of transfer including capital gains tax, stamp duty, conveyancer fees, etc. Again, a cost-benefit analysis is a must before the change.

Last but not the least, did you combine all the above strategies and compare your choices? If you haven’t yet, how would you know that you have picked the best strategy to minimize your taxes? We can help you to factor in all considerations, compare different scenarios, also present you with a Property Prepurchase Report with all our findings to help you to make a decision. Contact us today to book in a consultation with an experienced tax accountant!

This is general advice only and does not consider your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountant.

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