Salary Sacrifice income to pay interest on investment loans

[ros]

Hi,
This is such a good discussion to follow. We are in the top tax bracket and our accountant is trying to talk us into setting up our own super fund and salary sacrificing into that. I want to invest in prperty and reduce our tax that way. I figure that there is more growth long term in property than sitting in a super fund. I'm just learning about all this so I was wondering if anyone had any experience with this. Thanks.
Ros

 

[geoffw]

Hi,
This is such a good discussion to follow. We are in the top tax bracket and our accountant is trying to talk us into setting up our own super fund and salary sacrificing into that. I want to invest in prperty and reduce our tax that way. I figure that there is more growth long term in property than sitting in a super fund. I'm just learning about all this so I was wondering if anyone had any experience with this. Thanks.
Ros

.Cutting tax is not a good motive for investing in anything. Have a look at the value of the investment in its own right first up- and then take tax breaks as a bonus (rules could change at any time)

.The accountant may well get commission for putting you into a managed fund for which he gets commission. He would not get commission on a property sale

.Investing in property gives you an advantage of leverage which you do not get in super- you cannot borrow anything in a super fund (with a few exceptions).

Two or three years out of the last four have seen some very poor fund performances. Even with good performances you might be lucky to see much more than 10%. A well selected property should return 7% pa average in the long term- but then you are putting only 20% of your own money, so that is effectively 35% (simplified I know)

 

[Aceyducey]

Ros,

I suggest you look around for a different accountant.

one focused on wealth creation not tax minimisation.

It is a VERY different mindset.

Cheers,

Aceyducey

 

[VHproject]

escuse me for not knowing but what is fbt?

cheers

 

[Timmsi]

Hi,

Fringe Benefits Tax (FBT) was introduced to catch people that were getting benefits from their employment that weren't taxed when they salary sacrificed their "cash income".

Peter

 

[XBenX]

then am I any better off than simply claiming the interest payments as a tax deduction either at the end of FY or throughout the FY under s221D?

The time value of money would suggest that throughout the FY would be the better option.

If you want to be sure - grab PIA and work out the IRR (or excel) or if your feeling nostalgic grab a pencil and your NPV formula...

 

[Bear924]

Just to get back to Bella, our salary sacrafice discussion is still ongoing however I was told today that the laws for salary sacraficing to your PPOR has now changed. All you need is to have salary sacraficing in your work's EA (for housing) and live in a remote location (as determined by the tax office). I'm no expert however it is certainly sounding very promising.