Smart Investing
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The Chinese calendar says this is the year of the dragon. Less auspicious perhaps but for Australian investors this is shaping up as the year of fixed income.
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By taking a few simple steps, super fund members can both boost their retirement savings and legally minimise tax on their super – for themselves and their beneficiaries.
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Self-managed super funds seem set to remain by far the preferred superannuation choice among higher-balance members – particularly those in retirement.
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This is a question that many investors are, not surprisingly, asking themselves. But what might surprise some investors is that the answer is not as elusive as it may at first seem.
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Changes to the ASX operating rules to allow fixed income Exchange Traded Funds (ETFs) to trade on the Australian market will open a new means for investors to efficiently, conveniently and inexpensively diversify their investment portfolios.
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News & Commentary
You have been warned 14 Jul 10
The tax office practised a little careful timing earlier this month by releasing its Compliance Program 2010-11 before most taxpayers had begun to think about preparing to lodge their latest tax returns.
For those who haven’t looked through an ATO compliance program before, it is a document well worth reading before lodging returns and before undertaking tax planning for the new financial year. See Compliance program 2010-11
In a few words, the compliance program points to where the tax office will strike next while providing a valuable overview of Australia’s tax system.
For instance, 12.6 million individuals lodge Australian tax returns with 72% ohem using a tax agent.
And two million individuals using the electronic filing system e-tax have parts of their returns “pre-filled” by the tax office – providing such information as dividends and interest received. And tax agents have the same pre-filled information provided on behalf of more than seven million individual clients.
Some of the key points made in the Compliance Program 2010-11 are:
- The ATO has been tightening its data-matching and its risk filters (which try to determine the level of risk to revenue presented by a taxpayer) in an attempt to identify those who understate income, overstate deductions or simply do not lodge their returns. Data-matching currently involves sifting through 500 million transactions, using details reported by third parties.
- More attention is being paid to property investors – particularly first-time investors – who may be incorrectly reporting rental income, for example.
- Claims of deductions for superannuation contributions by individuals are being checked against information provided by their super funds.
- Almost 11,000 self-managed super funds will be audited this financial year. And the ATO will focus, among other things, on SMSF loans to related parties – such as members, associated entities and relatives.
And the tax office will continue to examine the services to clients provided by lawyers, bankers and investment bankers to determine any risk to tax revenue.
With the ATO laying out the broad plans for its tax compliance activities, taxpayers can’t say they haven’t been warned.
* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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