3 Ways to Activate Tax-Free Investment Returns

“Nothing is certain except death and taxes.”

This famous Benjamin Franklin quote still remains true more than 200 years since it was first uttered. 

But does that mean the ATO has to be hanging around with its hand out every time you’re transacting?

No, it doesn’t. 

Here are three clever ways to generate tax-free investment returns in Australia. 

1. Capital Gains Tax Property Six-Year Rule

Property investors, take note: you could potentially save thousands of dollars by leveraging the capital gains tax property six-year rule. 

What’s this all about? Essentially, it’s a regulation that allows you to treat your property investment as if it were your principal place of residence (PPOR) for up to six years while you rent it out.

This means you could sell the property within the 72-month timeframe and be exempt from paying capital gains tax (CGT)—just as you would if you sold a property considered your main residence.

But there’s a catch: the property must first be lived in by the investor for a period of time. 

A heads-up for homeowners, too. The rule aids those who wish to make additional revenue for a period that they can’t or don’t wish to live in their home, without triggering a need to pay CGT upon its eventual sale.

Happy days.

2. Franking Tax Offsets From Australian Shares

Have you received franked income from Australian shares, or are expected to?

You may be entitled to franking tax offsets. 

Because most listed companies pay tax at the rate of 30%, some dividends received by an investor earn a tax (franking) credit on this income—as it has already been taxed.

For example, if you solely received $50,000 in dividends from Australian shares within a financial year—and only 50% were franked—you’d be entitled to a tax refund of $3,247. 

And we all love the words ‘tax refund’.

3. Drawing a Pension From a Superannuation Fund

Superannuation is a fantastic investment vehicle, as all income/gains are tax-free after having commenced a pension—currently up to a balance of $1.9 million per person.

This is most often implemented in two ways.

The first is when someone has reached their preservation age—between 55-60, depending on the year born—and met a condition of release, such as ceasing employment. 

The other is having turned 65.

Whatever the case: advantage, you. 

Capitalise on Tax-Free Investment Returns

While these strategies for generating tax-free investment returns have tangible rewards, they are complex to action. 

It’s why we recommend seeking professional advice to put them into play.

And trusted financial advice starts with PrimeAdvisory. 

Email us or give us a call on +61 02 9415 1511.

Let’s see what’s possible.