Key Insights into Australian Financial Planning for 2023

Set out below are a few statements, figures, and facts which are not necessarily well known.

• 80% of Australians will at some stage of their lives be on a partial Centrelink Age Pension.

• Any Capital Gain from the sale of shares or property etc. is discounted by 50% when the investment/item is held for more than 12 months. This means, at the very most (depending on all else), that any capital gain income tax will never be more than 23.50% (half of the top marginal tax rate of 47%). Often, the tax is significantly less when employing other strategies.

• Low-income earners can receive a government co-contribution to their superannuation of up to $500 each year by contributing $1,000 of their after-tax income to their superannuation, subject to certain conditions.

• Superannuation pensions received from age 60 are tax-free, including any lump sums for retired persons.

• Certain pensioners/seniors can earn approximately $33,000 per annum and pay no personal income tax.

• Fully franked share dividends can add close to 2% per annum to your overall investment return, depending on the percentage of the share dividend.

• With Exchange Traded Funds (ETFs), investors can gain access to the shares/companies of the World for as little as $1,000 and can add small amounts monthly by regular debit to their bank account.

• Term Deposits are now paying interest of up to 5%, depending on the term and amount. Internet Savings accounts are paying similar interest.

• For risk-averse investors, their Superannuation and/or Pensions can be invested solely in Cash and Term Deposits.

• The Age Pension full amount available is now $41,000 (couple) and $27,000 (single person), subject to the usual Assets and Income Tests. Receiving this full amount equates to approximately 60% of the average living expenses.

At Plus1, we are always available to discuss matters related to your investments or financial planning.