Tax

When you make money, you will generally be taxed on it. Your investment may have tax implications, including when you:

• sell at a profit (realise a capital gain)
• earn income, or
• receive or reinvest funds at maturity.

If you are unsure of when and how much you will be taxed, you should seek independent professional advice.

Tax concessions are designed to give you an incentive to invest in certain ways, and there's no reason not to make use of them. For example, super can be a tax-effective investment, because your super earnings are generally taxed at only 15%. This attractive tax environment is designed to encourage you to save for your retirement.

You may be deciding whether to invest in Australian versus international shares. Certain dividends from Australian shares may be paid out of the company's after-tax profits. Australian investors receive a tax credit called a franking credit that acts as a tax offset. This credit is also called an imputation credit.

To find out more about tax-effective investing, speak to an adviser.

Whenever you sell an investment, there is always going to be a tax implication. You may make a profit when you sell your assets (a capital gain), or a loss (capital loss). You can offset capital gains against capital losses.

Because capital gains tax (CGT) applies at your marginal tax rate, it could be as high as 48.5%. If you hold the asset for a year, your CGT may be halved. If you're thinking of selling an asset, you should seek independent professional advice first.

Check out capital gains.

Your investment income may affect your ability to receive the Age Pension, or other social security benefits. You should also be aware that when it comes to your retirement, there is a limit to the amount of money you can take at the favourable tax rates. This is called your Reasonable Benefit Limit (or RBL). You should seek independent professional advice - especially when it comes to retirement.

Check out our 'Retirement' section.

Some expenses associated with your investment may be tax-deductible in the current year – others may be taken into account in working out your capital gain or loss when you sell your investment. Keep good records, including all receipts and tax invoices. You will also need all your paperwork in case of an audit.