Investment taxes the single biggest cost for investors

posted on August 20th, 2014 by Bellmont Research Team

CGT

Recent research out from APRA highlights just how important it is for investors to consider the tax impacts of their investing strategies

According to APRA figures, investment taxes borne by super funds collectively total $3.25 billion a year, and costs from investment management and implementation total $2.54 billion a year.

Note that these figures are for super funds, which have tax rates of a maximum of 15% – far lower than average tax rates for most investors operating outside the Superannuation environment. Yet despite this, the cost of taxes for super funds is almost 30% higher than total management costs!

Reducing management fees is obviously important for investors to maximise returns, but it’s completely overshadowed by the need to manage portfolios in a tax-efficient fashion. This means maintaining beneficial ownership of assets (rather than using unitised structures), keeping portfolio turnover as low as possible, and aiming to ensure any CGT incurred is concessional in nature.



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