Tradies – Time to put some away!
Written and accurate as at: May 13, 2019 Current Stats & Facts
When fate hands you some extra money, do you blow it all, save it all or blow some and save some?
If you’re in the building industry, chances are the Financial Year that’s about to end on 30th June may have been more profitable than normal. Many trades have been making good coin on the back of cyclone repairs around the region. Unfortunately, that’s not the case for many in tourism.
Higher income provides opportunities to enhance lifestyle, reduce debt or build wealth for the future. Allocating some money to all three areas provides that trifecta of an immediate reward, more equity for the next downturn and more security in knowing you’ve got a plan for the future.
When we make more profit, it follows that the tax man will eventually come knocking for their slice of the bigger pie. When you consider personal tax rates can be as high as 47%, understanding your tax situation and how to minimise it is probably the highest value job you can allocate time to. Have you had a chat to your bookkeeper and accountant to get an estimate of how much additional tax you’ll be up for when they lodge your 2019 Tax Return?
There are a couple of options for reducing your tax bill but one of the simplest and best is putting some money in to super. Sure, there’s trade-offs in that you can’t access it until you’re in your late 50’s or 60’s but you pay super for your workers so why not for yourself? Super contributions are generally only taxed at 15%. If you’re in the top tax bracket and paying 47% that’s an immediate saving or return of 32% on your investment. Even if you’re not in the top tax brackets but are earning between $37,000 and $90,000 your individual tax bracket is still 32.5% and 15% is a hell of a saving.
Before you act there’s a few things to check out. What’s your age that you can get at your super? What’s the cap on how much you can put in? Is your existing super fund decent? Should you look at a Self-Managed Super Fund? What about property via super? How much do you need to build up for a comfortable retirement? What about insurances attached to super?
30th June is not far away, and you may need a couple of weeks to properly assess your options. It’s no good making decisions in the last week of June as you’ll restrict yourself to just using your existing fund. Start looking at it now and give yourself some time to make better decisions.
For a free consultation with local people who understand the complexities of these or any other financial matter, contact Eclipse Financial Services on 1300 857 359 today or visit www.eclipsefs.com We’ll even shout the coffee!
