Tax Effectiveness

Before Eclipse Initiatives ...

Career success and the new options it provides also create new points at which the successful individual can be taxed.

Income tax on what you earn combines with FBT on fringe benefits. This is followed by 15% tax on contributions (+ surcharge in many cases) on what you save into super, then GST on what you spend.

It doesn't stop there. Usually senior executives or public figures can expect luxury car tax on what they drive, plus tax on what they sell or earn in interest.

Clearly the standard senior executive model is not tax efficient. It exposes the successful individual to a wide range of taxes for which deductions are few.

Creating true tax efficiency is as much about timing as it is about design.

Simply put, tax-neutral or tax-effective structures are easier to create in advance than to impose after the tax has already been incurred.

This requires rare foresight from an accounting profession trained to work in hindsight. Accountants are trained to report on what has already happened.

This retrospective view is of little use in an age when tax efficiency has to be designed well in advance, not applied well in arrears.

Tax Effectiveness Initiatives

Creating tax-effectiveness for the senior executive or public figure is, above all, proactive. If it's not done ahead of time and with a clear view to the future, it's unlikely to maximise the possibilities available to the PAYE executive.

One Eclipse initiative is to make effective use of superannuation contributions. Naturally, the purpose of superannuation is to fund your comfortable retirement but managing contributions effectively also provided you with a tax advantage. Clients approaching retirement have a particular opportunity to significantly boost their superannuation and reduce their tax rate in the process.

Leveraged real estate asset acquisition can be designed with similar efficiency even for clients not in a position to sell the asset in a capital gains tax protected environment. The leveraging attracts deductible financing costs while providing a far larger asset with consequently greater depreciation allowances.

Structures such as sophisticated family trusts can quarantine assets while maintaining the purpose to which the savings are applied such as childrens' education. And trusts can concentrate the distribution of income on the lowest taxed family members.

Golden handshakes can represent a substantial tax liability when the full amount is cashed in the year it is received. Eclipse tailored initiatives create tax-efficient structures to ensure golden handshakes don't lose their shine.

Likewise proceeds from the sale of a business can be timed to minimise the impact of capital gains tax and received as income streams rather than a lump sum.

Sound interesting? Oh yes, interest received on your savings can be structured to be tax effective too. Contact us to arrange a meeting free of any cost or obligation.