Reduce Your Personal Tax & Build Long Term Assets With Salary Sacrificing

by Dominique Schuh

The Australian share market firmed again, after soft US inflation data soothed rate rise fears, but forecast matching Chinese GDP growth had no impact on investors increasingly dubious over its accuracy. Following a quiet session on Wednesday, the S&P/ASX 200 index closed up 24.6 points, or 0.46 per cent, at 5435.4 as industrials and consumer stocks outperformed. The Australian dollar has edged higher against the greenback as the local unit was trading at 76.76 US cents at 1700 AEDT on Wednesday, up from 76.66 US cents on Tuesday.

What this means for you:
The uptick in the mining sector has investors on the hunt for junior Australian miners and explorers with attractive prospects. We would suggest caution against piling into individual speculative mining shares. If you'd like an exposure to this area, a safer way to access would be to include a holding of an Australian small cap index, which will automatically have an amount of smaller mining companies in this fund. We know that smaller companies do behave with more volatility, but when compared to large companies, they outperform around 75% of the time over a 10 year period.

Don't forget the benefits of salary sacrificing. It's an easy way to reduce your personal tax while also building long-term assets in a favourable tax environment – superannuation. In this current financial year the maximum amount that can go into super as a concessional contribution is $30,000 for those under 50, and $35,000 for those between 50 and 75 (over 65's need to meet a work test to contribute). Next year the figure drops to $25,000 for everyone, so make the most of this current financial year if you'd like to get more into super.

If you would like to review your current structures, contact us today on 5482 2855.