Financial planning is really about… investment structures

Your client’s decision on whether to use a structure to own their investments may have a significant impact on the after tax return they earn from their investments.

The difference can be as much as an extra 3% after tax return a year.

The choice of investment structure can have a real impact and it’s an area you should be advising on. The common structures and their usual uses are shown in this table.

Option

Cost

Complexity

Tax

Asset protected

Individual

Low

Simple

Inefficient income tax 50% CGT exemption
Small business concessions apply

No

Spouse

Low

Simple

As above

Yes, except for bank and FLA

SMSF

Medium

Simple (assuming simple investments)

Very efficient
Nil tax in pension mode

Yes, except for bank and FLA

Family Trust

Higher

Moderate

Can be very tax efficient 50% CGT exemption
Small business concessions apply

Yes, except for bank and FLA

Company owned by FT

Higher

High

Can be even more tax efficient through careful management of franking credits

Yes, except for bank and FLA

Dover-Lagel-Doc

The Dover Group