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EOFY Tax Hacks For Your Share Portfolio · She's On The Money

0:00
Speaker 1: She's on the Money. She's on the Money.
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Speaker 2: My name's Tatasha Bamblet. I'm a proud First Nations woman
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Speaker 2: and I'm here to acknowledge country. Hello, beautiful friends, we
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Speaker 2: gather on the lands of the Aboriginal people. We thank,
0:18
Speaker 2: acknowledge and respect the Aboriginal people's land that we're gathering
0:21
Speaker 2: on today. Take pleasure in all the land and respect
0:24
Speaker 2: all that you see. She's on the Money podcast acknowledges culture, country,
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Speaker 2: community and connections, bringing you the tools, knowledge and resources
0:32
Speaker 2: for you to thrive.
0:32
Speaker 3: Hello, friends, and welcome to another deep dive episode over
0:36
Speaker 3: She's on the Money, the podcast that helps make your.
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Speaker 4: Personal finances feel a little less overwhelming, especially at tax time.
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Speaker 4: That is right, we are.
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Speaker 3: Reaching the pointy end of the financial year, and whether
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Speaker 3: you're facing a spicy bill or you're looking forward to
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Speaker 3: a very cheeky little return, we have questions like how
0:55
Speaker 3: are your investments taxed? And how might changes in this
0:58
Speaker 3: year's budget affect the way that the AI is going
1:00
Speaker 3: to view your shares. Whether you've been investing for years
1:03
Speaker 3: or you're just getting started, My friend, this episode was
1:06
Speaker 3: made exactly for you. Will be explaining when you actually
1:10
Speaker 3: pay tax, what needs to be reported, and the legit
1:13
Speaker 3: ways that savvy investors minimize their tax bill.
1:15
Speaker 4: Come June thirty.
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Speaker 3: More on that though, after this very short break, Hello
1:23
Speaker 3: and welcome back to She's on the Money. I am,
1:26
Speaker 3: as always Victoria Devine and joining me on the deep
1:29
Speaker 3: dive couch today is not who you would expect. It
1:33
Speaker 3: is the gorgeous miss Jesse garci me. Hi, friends, are
1:37
Speaker 3: you excited to talk about investing in.
1:39
Speaker 1: Tax I'm very excited. I love tax time. I think
1:42
Speaker 1: you've rubbed off on me. In that case, you get
1:44
Speaker 1: tax back every time, correct. I am one of those
1:47
Speaker 1: people who is looking forward to a cheeky little return.
1:49
Speaker 4: I love that for you.
1:50
Speaker 3: But let's get straight into it. So when do you
1:53
Speaker 3: actually have to pay tax when it comes to shares.
1:55
Speaker 3: Let's say that you own shares or ETFs, which are
1:59
Speaker 3: bunds of shares, and have earned a dividend sexy or
2:02
Speaker 3: you've gotten a distribution even sexier. Here, you might need
2:06
Speaker 3: to pay tax on what you've earned because it's actually
2:09
Speaker 3: considered a form of income. And I think that's where
2:12
Speaker 3: people start going, is it worth it?
2:14
Speaker 4: Like yes, queen?
2:16
Speaker 3: Like if you're making money and you're paying tax, you're
2:18
Speaker 3: clearly in a better position.
2:19
Speaker 1: Yeah.
2:20
Speaker 3: But the sticky thing there is that sometimes we just
2:23
Speaker 3: don't know that we have to pay tax on income
2:26
Speaker 3: like that because we might be just like PAYG employees
2:29
Speaker 3: and it's always been taken out beforehand. So it feels
2:32
Speaker 3: like a kick in the butt when you're like, I
2:33
Speaker 3: was trying to get ahead and now I've already spent that,
2:36
Speaker 3: or I've already reinvested that. It feels like kind of
2:39
Speaker 3: mean to be tax Yeah.
2:41
Speaker 1: That's why we're getting you to think about it now exactly.
2:44
Speaker 3: And if you've earned a dividend and then you've reinvested
2:48
Speaker 3: that back into a portfolio, I think a few people think, oh,
2:50
Speaker 3: well it's back in my investment. I don't know anything,
2:53
Speaker 3: but you might actually have to pay tax on that
2:55
Speaker 3: as well. So additionally, if you've then sold some shares
2:59
Speaker 3: or so some of your ETFs and you've made a profit,
3:02
Speaker 3: that's actually called and it's hot topic of the moment,
3:05
Speaker 3: that's actually called a capital gain, and you will very
3:08
Speaker 3: likely need to pay tax on that. But the amount
3:11
Speaker 3: of tax you pay is going to vary depending on
3:13
Speaker 3: when you earn the dividends. The distributions or capital gains
3:16
Speaker 3: on that asset, and how long you actually held that
3:19
Speaker 3: asset for. So there's a little bit of, like I
3:22
Speaker 3: keep using the word today, nuance, and I'm glad that
3:26
Speaker 3: all of the episodes I've recorded today aren't coming out
3:28
Speaker 3: on the same date because you'll be like, I'm nuanced out.
3:31
Speaker 3: But there is a lot of nuance. And because earning
3:34
Speaker 3: anything from your shares counts towards your personal income, your
3:38
Speaker 3: investments can actually influence and this is like a good
3:41
Speaker 3: thing and a bad thing, but it can influence your
3:42
Speaker 3: marginal tax rate. So like, if you start to accrue
3:46
Speaker 3: a really nice investment portfolio, it might tip you over
3:50
Speaker 3: into the next marginal tax rate, which won't have been
3:53
Speaker 3: considered in your actual payg job, and it might be
3:57
Speaker 3: an even ruder surprise come tax time. So we want
3:59
Speaker 3: to keep track of this and make sure that we're
4:01
Speaker 3: all hunky dory, right.
4:02
Speaker 1: Yeah, and just make it extra fun. Shares and ETFs
4:05
Speaker 1: also taxed a little bit differently, aren't theyre.
4:07
Speaker 3: Yes, So with shares, your tax on your dividends, which
4:10
Speaker 3: is the amount that the company will pay its shareholders
4:13
Speaker 3: for its profit each and every single year. But Let's
4:16
Speaker 3: say that you paid tax on your shares at the
4:19
Speaker 3: corporate level already. You might actually receive what's called a
4:22
Speaker 3: franking credit, which is kind of like a little IOU certificate.
4:26
Speaker 3: And I think that's the way or the best way
4:27
Speaker 3: to explain it, because the company gives you an iouah
4:30
Speaker 3: and says, hey, jes you owned this direct share, but
4:33
Speaker 3: don't worry, we already paid thirty percent tax on it.
4:36
Speaker 4: And you go, oh, that's hot.
4:37
Speaker 3: I'm going to keep this IOU and give it to
4:39
Speaker 3: the ATO, and then that can be used to offset
4:42
Speaker 3: your income tax, which is basically a way to let
4:44
Speaker 3: the ATO know that you've actually paid tax already through
4:48
Speaker 3: the company on some of your investments, so that they don't.
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Speaker 4: Tax you twice. Because that's not sexy.
4:53
Speaker 1: No, someone who's been there, not fun.
4:55
Speaker 3: I was about to say, and you've got beef with
4:57
Speaker 3: the ATO at the moment because they did, in fact
4:59
Speaker 3: tax you to on something and you made the news.
5:02
Speaker 1: Yes, the news, this the whole thing. Don't be like
5:05
Speaker 1: me your hand.
5:07
Speaker 3: Also, that's a really important lesson on manifesting because in
5:10
Speaker 3: our team, when something goes wrong, we are really dramatic
5:13
Speaker 3: and we will say something like, oh my god, I'm
5:15
Speaker 3: gonna be on the news because obviously we're so mad
5:18
Speaker 3: that we're going to do something that ends us up
5:20
Speaker 3: on the news. You said that one too many times.
5:23
Speaker 3: I fear I did you flew too close to the sun.
5:26
Speaker 3: And the ODA was like, well, you're gonna beyond the news.
5:28
Speaker 3: We give you what you want anyway. So that is
5:31
Speaker 3: really nice when it comes to direct shares. But then
5:35
Speaker 3: with ETFs, they are slightly different and they are treated
5:37
Speaker 3: more like trusts when it comes to tax. So ETFs
5:41
Speaker 3: often pay what's called a distribution, which is the profit
5:45
Speaker 3: that comes off multiple different types of assets. And because
5:49
Speaker 3: the bundles are made up of different shares and like
5:52
Speaker 3: some would be you know, corporate direct shares, some might
5:55
Speaker 3: be you know, different trust assets, they can often be
5:58
Speaker 3: taxed completely differently. So you'll often receive some franking credits
6:02
Speaker 3: to offset your income when completing your tax return, but
6:05
Speaker 3: not every single one is going to have that, so
6:08
Speaker 3: it's taxed a little bit.
6:09
Speaker 4: More in a complex way.
6:11
Speaker 3: But don't worry, because I don't want you to go,
6:12
Speaker 3: oh my gosh, should I not buy an ETF? Then
6:14
Speaker 3: that sounds hectic v your investing platform will usually just
6:18
Speaker 3: put it on a silver platter for you and be like, hey,
6:20
Speaker 3: this is what your ETF did. Just provide this piece
6:23
Speaker 3: of information to the ATO.
6:25
Speaker 1: Amazing, So don't stress. If you've invested in shares and ETFSR,
6:29
Speaker 1: is that how you would go about finding out how
6:31
Speaker 1: much you've earned in dividends and capital gains and distributions.
6:34
Speaker 3: Yes, and this is why we talk about the importance
6:36
Speaker 3: of the platform that you're on. So if you've bought
6:39
Speaker 3: your shares through a platform, you're going to get a
6:41
Speaker 3: statement at the end of the financial gear that is
6:43
Speaker 3: literally a rundown of all of this information so that
6:46
Speaker 3: you just hand it over. And now I'm going to
6:49
Speaker 3: talk about shares's in a non sponsored way, but just
6:52
Speaker 3: in a way that's like, Okay, I know most of
6:54
Speaker 3: our community use shares is to invest, and I know
6:57
Speaker 3: that the comments on Spotify are going to be like,
6:59
Speaker 3: how do I do this?
7:00
Speaker 4: Does chares support this? Yeah, there are.
7:02
Speaker 3: Features on the Chaiseas platform that let you do this,
7:05
Speaker 3: and it basically just if you go into your settings
7:09
Speaker 3: at any point, it will show you how much you've earned,
7:12
Speaker 3: like so think dividends, your distributions, your capital gains and
7:15
Speaker 3: if you've sold it will also note that and will
7:18
Speaker 3: let you know what profit you have to pay tax
7:20
Speaker 3: on during that year. So it kind of like I
7:22
Speaker 3: use that part in my shares EA's app, not just
7:25
Speaker 3: for tax because I'm pervy. I want to know how
7:27
Speaker 3: much money I'm making. I like logging in and being like, oh,
7:30
Speaker 3: X return.
7:32
Speaker 1: And I like that it tells you when there's one
7:33
Speaker 1: coming up, like when it says all upcoming dividend, I
7:35
Speaker 1: get really excited, even though it might not be that much,
7:37
Speaker 1: but like money is coming.
7:39
Speaker 4: From a little things.
7:40
Speaker 3: Big things grow and I think that's fun, right, But
7:43
Speaker 3: I love the nuance.
7:45
Speaker 4: There's that word again.
7:46
Speaker 3: But I love being able to see ooh okay, I've
7:49
Speaker 3: had you know, let's pretend I had eleven percent return
7:51
Speaker 3: on something. The second I've seen numbers like that, I'm like, oh,
7:54
Speaker 3: I want to know how, Like was that a dividend?
7:56
Speaker 3: Was it a distribution? Like was it just growth in
7:59
Speaker 3: the value of a ship? Like I wouldn't know what
8:01
Speaker 3: that looks like. Yeah, but here's the thing. If you're going,
8:05
Speaker 3: oh my gosh, and miss jessic RICHI used to be
8:07
Speaker 3: like this, where come June thirty yeah, dot all o
8:11
Speaker 3: Ies cross aller tease, she's got an income statement from work,
8:14
Speaker 3: and you would basically put your tax in on the
8:16
Speaker 3: first of July.
8:17
Speaker 1: Oh yeah, I was like, give me that refund, Yeah,
8:19
Speaker 1: one hundred percent.
8:20
Speaker 3: But if you're an investa, that statement from your share
8:24
Speaker 3: platform actually can't even be started to be generated until
8:28
Speaker 3: they have all of the information from the ASX to
8:31
Speaker 3: start creating these reports for you, So that statement might
8:34
Speaker 3: not arrive in your hot little hands until mid July
8:37
Speaker 3: or even September. And that's reasonable. Yeah, Like I know
8:40
Speaker 3: it doesn't feel it because you're like, but I want
8:42
Speaker 3: to do my tax but they're doing like all of
8:45
Speaker 3: the numbers for every single one of the people on
8:48
Speaker 3: their platform.
8:49
Speaker 4: That's a lot so way.
8:51
Speaker 3: For some share platforms, you will not see your tax
8:55
Speaker 3: statements till September, and that's okay.
8:57
Speaker 4: The atier is not going to crucify you for that.
8:59
Speaker 4: But in come September you can do your tax return. Yeah.
9:02
Speaker 1: And if you're going to book in to see somebody,
9:04
Speaker 1: because I always booking to see my tax agent ahead
9:06
Speaker 1: of time because they obviously book out really quickly, Yeah,
9:08
Speaker 1: don't be booking an early.
9:11
Speaker 4: July one appointment and thinking for you're so smart.
9:14
Speaker 1: Yeah, but push it out.
9:15
Speaker 4: A little bit, give yourself some room.
9:16
Speaker 1: Meant, all your reports from your back.
9:17
Speaker 3: By letters going to be like, what are you doing here, Jess,
9:19
Speaker 3: You have not got all your stuff to me, and
9:21
Speaker 3: you'll be like, I'm just really tenacious, just excited. So
9:24
Speaker 3: say if you bought shares directly and you just went
9:26
Speaker 3: straight through to the ASX and you actually have chess
9:30
Speaker 3: sponsored shares, which a lot of people talk about, and
9:33
Speaker 3: a platform like Perla has chess sponsored shares, I feel
9:36
Speaker 3: like there's like a very big conversation at the moment
9:39
Speaker 3: going on about like whether it's chess sponsored or not. Personally,
9:42
Speaker 3: I don't mind, Like I don't need chess sponsored shares.
9:45
Speaker 3: You might think it's important for you anyway, if you
9:49
Speaker 3: also have shares through like a privately owned company or
9:52
Speaker 3: they were like my husband has some shares from companies
9:54
Speaker 3: he used to work for and they were issued directly.
9:57
Speaker 3: There's actually a registry called computer Share, and Jess, you've
10:01
Speaker 3: probably gotten letters from computer Share before, where if you've
10:04
Speaker 3: bought an asset, then a letter turns up at home
10:07
Speaker 3: and it's like registry and you're like, wait, what why, Like,
10:10
Speaker 3: I don't know computer shap share never heard of it.
10:13
Speaker 4: But computer share.
10:14
Speaker 3: Is actually like an all rounder where you can access
10:18
Speaker 3: your information about the shares that you own, including earnings
10:21
Speaker 3: and things like that that the ASEX uses to register
10:24
Speaker 3: your information. So if you own anything directly and it's
10:27
Speaker 3: stamped with Jess's name, computer share kind of just gets
10:31
Speaker 3: the register to keep track of everything, because otherwise, how
10:33
Speaker 3: do you know where all of this stuff that you're
10:35
Speaker 3: buying is going if not on a platform, And.
10:38
Speaker 1: That might be handy. Like my partner has shares that
10:40
Speaker 1: I think were bought for him when he was young
10:42
Speaker 1: by his dad or his grandpa, and it's you know,
10:44
Speaker 1: there's the paperwork back then there you didn't have the
10:47
Speaker 1: computer or the email the computer, We didn't the internet, yea,
10:51
Speaker 1: I had to like send things on Yeah, and so
10:54
Speaker 1: it might be handy if there's things like that where
10:55
Speaker 1: you go, oh, I know I own something, but I
10:57
Speaker 1: don't know what it is. You could jump on that
10:58
Speaker 1: registry and search up to find it.
11:00
Speaker 3: Yeah, you should be able to do that, and if
11:02
Speaker 3: it's not on there, you can trace it through a
11:04
Speaker 3: platform like computer share. I do think it's so funny though,
11:08
Speaker 3: because you know, we now jump online and I say
11:11
Speaker 3: things so flippantly like oh, you can invest for as
11:13
Speaker 3: little as one cent, and you just go wow. That
11:15
Speaker 3: means you know, that's quite incidental. Back in the day, Jess,
11:19
Speaker 3: you used to have to trot down to Colin Street
11:22
Speaker 3: and go to the Australian Stock Exchange and be like, hello,
11:26
Speaker 3: kind sir, I would like to buy six sterlings worth
11:29
Speaker 3: of PHP Yeah. Wow, Like you had to physically turn
11:33
Speaker 3: up to the exchange and you would exchange your money
11:36
Speaker 3: for a share in a business.
11:38
Speaker 1: Wow.
11:38
Speaker 4: Talk about prohibitive.
11:40
Speaker 1: Yeah, I'd say what if you didn't live close to one?
11:42
Speaker 1: It just that I'm not for you. No, I don't
11:45
Speaker 1: like leaving my house.
11:46
Speaker 4: No you need that.
11:47
Speaker 3: So I now just invest from home. And also I
11:50
Speaker 3: realized that I'm is this psychotic. The other day I
11:53
Speaker 3: was like, oh, I'd like some more vdhg m H.
11:57
Speaker 3: And I was just sitting in bed at eleven pm,
12:00
Speaker 3: and so I put a little trade in to pick
12:02
Speaker 3: up some more VDHD when the market opened the next day,
12:05
Speaker 3: and I was like, past victoria, Like if we went
12:08
Speaker 3: back to high school, should be so confused.
12:11
Speaker 1: It's like the antithesis of late night shopping.
12:14
Speaker 4: But yessibly.
12:16
Speaker 3: But I was like, oh, market's like a little bit,
12:18
Speaker 3: you know what, I'll just do a little toppy toppy up.
12:20
Speaker 1: That's so fun.
12:21
Speaker 3: And that's how I talk about investing nowadays. The mediocre
12:25
Speaker 3: middle aged white men are not.
12:26
Speaker 4: Gonna like this.
12:28
Speaker 1: Well, speaking of the video middle aged white men, the
12:30
Speaker 1: latest budget did just drop.
12:31
Speaker 4: No good segue. Thank full of medioc middle aged white men.
12:35
Speaker 1: Thank you. There were some new changes to CDT which
12:37
Speaker 1: have just been announced, and it seems like this has
12:39
Speaker 1: got everybody in all of a tizzy. When does this
12:42
Speaker 1: come into effect? And can you explain what it might
12:44
Speaker 1: mean for you know, every day investmation?
12:46
Speaker 4: Totally? Totally and do you know what.
12:48
Speaker 3: The first thing I'm going to say about this is
12:50
Speaker 3: the budget is not actually written in stone, so this
12:53
Speaker 3: is a proposed budget.
12:55
Speaker 4: Yeah. So these CGT.
12:57
Speaker 3: Changes now have to be legislated, so nothing has been
13:01
Speaker 3: legislated yet. And I think that's a very important thing.
13:05
Speaker 1: Because people talk about it it seems like it's done.
13:08
Speaker 4: Yeah, it's done, It's gonna happen.
13:10
Speaker 3: There's still the potential this will get chucked out of
13:13
Speaker 3: parliament and they go absolutely not I mean I'm not
13:16
Speaker 3: going to get too political, but right now Labor have
13:18
Speaker 3: so many seats that it is very unlikely that one
13:21
Speaker 3: of their proposed changes gets chucked out. But I mean,
13:24
Speaker 3: this is why it's so important to be vocal on
13:26
Speaker 3: changes that you don't particularly like, because that's not a
13:30
Speaker 3: done deal. If you aren't happy with that, you can
13:33
Speaker 3: talk to your local member of parliament and have them
13:36
Speaker 3: maybe change their mind on it. So when it comes
13:38
Speaker 3: to voting, your votes matter anyway. Talking about CGT or
13:42
Speaker 3: capital gains tax, that's the tax applied when you sell
13:47
Speaker 3: an asset like an etf or share or even property
13:50
Speaker 3: when you make a profit. So you're not ever going
13:53
Speaker 3: to pay capital gains tax if you don't make a gain.
13:56
Speaker 3: Ye Like, it's not just like a tax you pay
13:58
Speaker 3: when you sell something. It's only a tax you pay
14:00
Speaker 3: when you profit from it. So to date, if you
14:04
Speaker 3: have held an asset for more than a year, like
14:09
Speaker 3: three hundred and sixty six days Jess, and then you
14:12
Speaker 3: sell it and you've made a profit, you would only
14:15
Speaker 3: be taxed on fifty percent of that profit.
14:17
Speaker 4: So let's say you.
14:18
Speaker 3: Made a ten thousand dollar profit on an asset, go
14:23
Speaker 3: the ATO is going to go great Norries, you actually
14:25
Speaker 3: only have to pay tax on five thousand dollars worth
14:27
Speaker 3: of that. That sounds like a money win, right, So
14:30
Speaker 3: that was the fifty percent CGT discount.
14:32
Speaker 4: And if you didn't know.
14:33
Speaker 3: About this, I'm really sorry, but if you held that
14:35
Speaker 3: asset for less than a year and then you sold
14:38
Speaker 3: that asset, you would actually be taxed on that full
14:41
Speaker 3: ten thousand dollar profit, so on one hundred percent of
14:44
Speaker 3: the profit you made. So this is also why long
14:47
Speaker 3: term investment makes a little bit more sense at this
14:50
Speaker 3: point in time. Hilariously, do you remember back when during
14:54
Speaker 3: COVID everyone was talking about like crypto yes, and they
14:57
Speaker 3: were like the crypto bros.
14:58
Speaker 4: Being like I made massive profit and I just sold out.
15:02
Speaker 3: And like I was laughing so hard because they were Australian,
15:05
Speaker 3: they were definitely under our tax laws and they were like,
15:07
Speaker 3: in the last six months, I made ierk's profit and
15:10
Speaker 3: I'm like, bro, hold it for another six months and
15:12
Speaker 3: then sell it.
15:13
Speaker 4: You just paid one.
15:14
Speaker 3: Hundred percent CGT. Yeah, you potato be strategic. Tell me
15:19
Speaker 3: you don't know what you're talking about without telling me anyway.
15:22
Speaker 3: In the recent budget, the government announced that it was
15:26
Speaker 3: going to propose to make some changes to CGT and
15:31
Speaker 3: take away our fifty percent discount and replace it with
15:36
Speaker 3: something different, and replace it with what they're calling a
15:40
Speaker 3: discount based on inflation plus a minimum of thirty percent
15:45
Speaker 3: on gains from the first of July twenty twenty seven.
15:49
Speaker 1: So anything that you've gained before next July, next tax time,
15:54
Speaker 1: it won't be affected. No.
15:55
Speaker 4: And that's called grandfathering.
15:57
Speaker 3: And you've probably heard that term floating around the media,
16:00
Speaker 3: And basically grandfather ing is where if you own an
16:02
Speaker 3: asset Jess, and you purchased it with certain rules and regulations,
16:06
Speaker 3: they're not going to pull the blanket out from under you.
16:09
Speaker 3: They're not going to go, oh, well, Jess, times have changed,
16:12
Speaker 3: your tax rules have changed. They're going to go, all right, well, Jess,
16:15
Speaker 3: we're not going to like change the game for you
16:17
Speaker 3: too much. We're going to let you have the old
16:20
Speaker 3: rules on the assets that you purchased before, but going forward,
16:24
Speaker 3: the new assets that you have will be taxed in
16:27
Speaker 3: this different way. So grandfather ing is basically where the
16:30
Speaker 3: old rules still apply because like it's basically unfair to
16:35
Speaker 3: take it away from you at this point. So hypothetically, Jess,
16:40
Speaker 3: if you bought a Vanguard ETF tomorrow YEP, and you
16:44
Speaker 3: sold it next June and you make a profit, you
16:48
Speaker 3: would still get your fifty percent CGT discount. But if
16:52
Speaker 3: you sold it after July one, the ATO would look
16:56
Speaker 3: at the profits after July one and would look at
16:59
Speaker 3: how inflation indexing applies to your gains before applying a
17:03
Speaker 3: minimum of thirty percent tax on them. And I've got
17:06
Speaker 3: and I won't go too deep into it because I
17:08
Speaker 3: did it in our the.
17:10
Speaker 4: Budget episodes, so people can go back to that.
17:13
Speaker 3: But there is a difference, and it depends on what
17:16
Speaker 3: your marginal tax rate was, how it impacts you. And
17:18
Speaker 3: I can make some examples for socials because I think
17:21
Speaker 3: people will care a lot, But for me right now,
17:24
Speaker 3: it's more about this is like hypothetical. I'm not going
17:27
Speaker 3: to keep creating content on things that haven't happened yet.
17:31
Speaker 3: I will do so and jump up and down if
17:33
Speaker 3: it does get legislated though, on how you can be
17:36
Speaker 3: the smartest with your money. Right So, if your marginal
17:40
Speaker 3: tax rate is above thirty percent, this could really impact you,
17:43
Speaker 3: and most of our listeners who are gainfully employed pay
17:46
Speaker 3: more than thirty percent tax, then you will pay your
17:50
Speaker 3: marginal tax rate on those gains.
17:52
Speaker 1: Interesting, So if you're somebody who put a little bit
17:54
Speaker 1: away every month or every week towards the same ETFs
17:57
Speaker 1: or shares, it can be hard to see how long
18:01
Speaker 1: you've owned each share for Like I can look at
18:04
Speaker 1: I earn own x amount of dollars of a specific share,
18:07
Speaker 1: but it's hard for me to tell what percentage of
18:10
Speaker 1: that I bought before a certain date. Is there an
18:12
Speaker 1: easy way to find that out?
18:13
Speaker 2: Oh?
18:14
Speaker 3: Yes, thank god, thank god, Because back when I was
18:17
Speaker 3: a financial advisor, Jess, there was a client that came
18:20
Speaker 3: to me and I had to backdate their share portfolio
18:24
Speaker 3: to calculate the CGT because they had owned shares that
18:29
Speaker 3: were owned by a grandparent and BHP shares were literally
18:34
Speaker 3: bought in British sterling. Wow, because we didn't have the
18:37
Speaker 3: Australian dollar when they started investing in them. So not
18:41
Speaker 3: only did I have to calculate the CGT on that,
18:43
Speaker 3: I had to do the currency exchange what that would
18:46
Speaker 3: actually mean. And I'm telling you right now, if there
18:49
Speaker 3: was ever a day where I wanted to quit being
18:51
Speaker 3: a financial advisor before I did, it was that day.
18:53
Speaker 3: I can imagine anyway, So whether you're with shares is
18:57
Speaker 3: or you've got computer share, you'll actually be to see
19:01
Speaker 3: which shares were purchased and when so that you can
19:04
Speaker 3: make more strategic decisions, like if you choose to sell. Obviously,
19:07
Speaker 3: what we're going to do is sell the oldest ones first. Right,
19:12
Speaker 3: we are going to take a very quick break, but
19:14
Speaker 3: when we return, we're going to be sharing the finer
19:16
Speaker 3: details around how you can minimize your tax if you
19:19
Speaker 3: have been investing. Welcome back, my friends, and this week
19:27
Speaker 3: Jess and I are chatting tax time and its implication
19:30
Speaker 3: on investors, which sounds a lot sexier to me than
19:33
Speaker 3: it probably does to our listeners, but it's really important
19:36
Speaker 3: that you get this. So if you've become a share
19:38
Speaker 3: market girly in the last twelve months, or you're planning
19:40
Speaker 3: on starting, you're probably going to want to tune in
19:42
Speaker 3: for the tips that we have on how savvy investors
19:45
Speaker 3: are minimizing their tax this end of financial year. Mster GRICI,
19:50
Speaker 3: what do you do personally before tax time when it
19:53
Speaker 3: comes to investing? Don't say listen to Victoria, because I
19:56
Speaker 3: would never give you advice.
19:57
Speaker 1: Absolutely not. No, I like to get my house in
20:00
Speaker 1: order I like to download all of my statements. I
20:02
Speaker 1: look at my tax holistically because obviously I freelance in
20:04
Speaker 1: addition to my PAAG income. Okay, I know, look at
20:08
Speaker 1: we go my I have earned a profit or dividends
20:11
Speaker 1: on my shares, and so I have to factor in
20:13
Speaker 1: all of the money that I've earned. And I look
20:16
Speaker 1: at that for me personally to see what tax bracket
20:19
Speaker 1: I'm sitting in and do some calculations around whether or
20:22
Speaker 1: not there's anything I can do to drop that.
20:25
Speaker 3: Oh I'm just thinking about that, and you might be
20:29
Speaker 3: screens great.
20:30
Speaker 1: Year for me, everybody playing along at home because I
20:33
Speaker 1: read on because I released my first Time to Save
20:36
Speaker 1: a scheme and a lot of things has been happening.
20:37
Speaker 1: So we're really crunching the numbers this year.
20:39
Speaker 3: Oh yo, letters got to work cut out for my queen.
20:43
Speaker 1: She's gonna be working hard this year. But yes, so
20:45
Speaker 1: I like to look at it because you know we've
20:47
Speaker 1: spoken about before general tax stuff. Yeah, there are lots
20:50
Speaker 1: of things that you can do to reduce your taxable
20:52
Speaker 1: income that might be contributing to super or your first
20:54
Speaker 1: home super Saver scheme. If you're saving to buy a house.
20:57
Speaker 1: It might be making charitable contributions. There are lots of
21:00
Speaker 1: different things that you can do, and if you're sitting
21:02
Speaker 1: right on the precipice of the next tax bracket up,
21:06
Speaker 1: it might be worth pulling it down. Because I obviously
21:08
Speaker 1: own my own business, I can also make purchases for
21:11
Speaker 1: the business that I need to make anyway, and those
21:13
Speaker 1: then can help offset some of my income. So having
21:16
Speaker 1: a look at how much I've earned holistically specifically including
21:20
Speaker 1: any dividends or payments that have come from my investments,
21:24
Speaker 1: mean that I can plan as best I can to
21:27
Speaker 1: put myself in the most positive position when it comes
21:30
Speaker 1: to my tax bracket.
21:31
Speaker 3: Yeah, ill d and then yeah, you can just handle
21:34
Speaker 3: all of that information over to your accountant. But if
21:37
Speaker 3: you do happen to be doing your tax yourself, which
21:39
Speaker 3: a lot of people in the Shees on the Morning
21:41
Speaker 3: community do and like we encourage because the ATO has
21:44
Speaker 3: a really good system that makes it I don't want
21:48
Speaker 3: to say fail safe, because it's not because you have
21:50
Speaker 3: to DoD all your eyes and cross all your teas,
21:52
Speaker 3: but like it is quite self directed, Like it is
21:56
Speaker 3: very easy to upload information and access it. But if
21:59
Speaker 3: you're doing your tax yourself, it really does pay to
22:01
Speaker 3: keep records relating to your shares and ETFs. But your
22:05
Speaker 3: statement from your platform will show the following things, right,
22:09
Speaker 3: It'll have the date and the price or reinvestments that
22:12
Speaker 3: have been made, the date and sale and sale price,
22:15
Speaker 3: like if you sold things. It will actually break down
22:18
Speaker 3: your brokerage cost or commissions paid to brokers when you
22:20
Speaker 3: buy and sell, which is something a lot of people
22:24
Speaker 3: are able to claim on their tax other expenses you
22:27
Speaker 3: incur to purchase them, like loan interest, the date and
22:31
Speaker 3: amount of any distributions you've received, even for ETFs, and
22:35
Speaker 3: the details of any non accessible payments that have been
22:37
Speaker 3: made to you. Then it will also have like the
22:40
Speaker 3: details of other CGT events, like if there have been
22:43
Speaker 3: unit splits, and this is where.
22:45
Speaker 4: It starts to get converts.
22:47
Speaker 3: Yeah, it starts to get a little bit complex, but
22:49
Speaker 3: you don't have to stress because your platform will do
22:51
Speaker 3: this for you. But things like unit splits or unit
22:54
Speaker 3: consolidations or returns of capitals, or takeovers or mergers or
22:58
Speaker 3: d mergers or like bonus unit issues which can happen. Yeah,
23:03
Speaker 3: that sounds complex, but it's usually just broken down in
23:05
Speaker 3: your statement, and then details of capital losses made in
23:10
Speaker 3: other years and now no one wants a loss, but
23:12
Speaker 3: losses can be used because you might be able to
23:16
Speaker 3: use that loss and say, well, actually, Victoria, last year,
23:19
Speaker 3: I lost some money. I'm going to put my hand
23:21
Speaker 3: up and tell the ATO about that. And then you
23:24
Speaker 3: might be able to offset these losses against your future gains.
23:29
Speaker 1: That's abstractive.
23:30
Speaker 3: That means TLDR, you will pay less tax on your
23:34
Speaker 3: gains because we made a loss prior. Yeah, so we
23:36
Speaker 3: don't bury our head in the sand when we have
23:38
Speaker 3: a loss. We are allowed to be a little bit annoyed, rightly, So,
23:42
Speaker 3: but just pop that one in your back pocket because
23:44
Speaker 3: then when you have a gain, you're paying less tax.
23:46
Speaker 1: Yeah.
23:46
Speaker 3: And now here's like where you can I guess make
23:48
Speaker 3: a quick win when it comes to minimizing your tax.
23:51
Speaker 3: Things like investment platform fees, brokerage cost or commissions paid
23:56
Speaker 3: to brokers during buying or selling, all of those can
23:59
Speaker 3: be against your earnings. These are things that usually I
24:03
Speaker 3: guess are reported in platforms, So just make sure you're
24:06
Speaker 3: taking a closer look at your dashboard and your confirmation
24:09
Speaker 3: emails or statements to find these. And just remember that
24:13
Speaker 3: while you can't claim, like if you go see a
24:15
Speaker 3: financial advisor, this is so dumb. I need to talk
24:20
Speaker 3: to someone at the government without this, because like I
24:23
Speaker 3: just have a personal gripe with this right. So you
24:26
Speaker 3: can't claim your initial statement of advice or initial advice
24:30
Speaker 3: session if you've seen a financial advisor, but you can
24:33
Speaker 3: claim your ongoing investment or like your sessions, they are claimable.
24:37
Speaker 3: Does the government not want me to be self funded
24:39
Speaker 3: in retirement? Yeah, Like if you want me to be
24:42
Speaker 3: self funded in retirement, which is going to take like
24:45
Speaker 3: big rants coming will cut myself off. You want me
24:48
Speaker 3: to be self funded in retirement so that I can
24:50
Speaker 3: help the economy keep moving forward and that you don't
24:54
Speaker 3: have to budget as much for me because I'm not
24:55
Speaker 3: relying on a pension or government assistance.
24:58
Speaker 1: Yeap.
24:58
Speaker 4: Why would you not make.
24:59
Speaker 3: Me getting advice in the first place deductible on my tax.
25:03
Speaker 1: It really doesn't make sense, And especially because I think
25:07
Speaker 1: a lot of people will just get their initial statement
25:09
Speaker 1: of advice and that will be their touch point and
25:11
Speaker 1: that's it, not that that's like.
25:13
Speaker 3: The thing that gets the ball rolling investing for myself sometimes,
25:16
Speaker 3: why can't I claim that on tax?
25:18
Speaker 4: It just makes sense because I'm gonna save you so
25:20
Speaker 4: much down the line, and especially because.
25:22
Speaker 1: You can claim if you see an accountant like I do,
25:24
Speaker 1: you can claim that on tax, yes, but.
25:27
Speaker 3: Like you just can't claim your statement of advice from
25:30
Speaker 3: a financial advisor. You can claim like any subsequent appointments
25:33
Speaker 3: about managing your money. Yeah, like that you've already invested,
25:37
Speaker 3: but like to set you up. They're like no go,
25:39
Speaker 3: so see that route anyway. You can also claim some
25:42
Speaker 3: of your personal insurances on tax if they aren't in
25:45
Speaker 3: your superannuation, so for example, like income protection and like
25:49
Speaker 3: maybe trauma could be claimed outside, which is kind of nice. Also,
25:54
Speaker 3: franking credits those little io us. If you're ETF investing
25:58
Speaker 3: companies that have already paid tax in Australia, any of
26:00
Speaker 3: those statements that show that you've received franking credits and
26:04
Speaker 3: income need to be documented because they're going to offset
26:07
Speaker 3: the tax that you pay. And I think that that's
26:09
Speaker 3: really sexy too.
26:11
Speaker 1: So lots of bits and pieces. Yeah, and we're putting
26:14
Speaker 1: this episode out now because we want you to start
26:16
Speaker 1: getting all your ducks in a row, get coordinated and organized.
26:18
Speaker 1: You've still got a little bit of time to pull
26:20
Speaker 1: it all together. So you can take a look at
26:22
Speaker 1: everything and make sure that you set yourself up to
26:25
Speaker 1: be in the best possible position.
26:26
Speaker 4: Yeah, exactly, your attacks exactly and these like.
26:29
Speaker 3: There are a few decent levers that you can pull
26:32
Speaker 3: to get like your balance down. But I think the
26:34
Speaker 3: biggest tip of all is like not selling assets if
26:37
Speaker 3: you don't have to. So that means that you don't
26:40
Speaker 3: have to pay CGT, Like you are only ever going
26:42
Speaker 3: to pay CGT when you sell an.
26:44
Speaker 4: Asset and dispose of it.
26:46
Speaker 3: And I guess that's another benefit of going well, I
26:49
Speaker 3: have a long term portfolio. Like for me personally, everything
26:53
Speaker 3: that I invest in shares, I don't plan to sell down.
26:58
Speaker 3: I plan to live off the dividate and the money
27:01
Speaker 3: that that money makes, and then hopefully one day I've
27:05
Speaker 3: made myself wealthy enough that I can and don't get
27:08
Speaker 3: me started on inheritance tax.
27:10
Speaker 4: That's a whole other damn podcast.
27:12
Speaker 3: But I can hopefully pass those down to my children,
27:15
Speaker 3: and they also won't have to sell my shares and
27:17
Speaker 3: they can just live off the profit that that share
27:19
Speaker 3: portfolio generates. And thus I hope to create intergenerational wealth.
27:24
Speaker 1: Ah don't we all?
27:25
Speaker 4: Would that be sexy.
27:26
Speaker 1: It'd be amazing.
27:27
Speaker 4: Anyway, money can be sexy. Tax is not.
27:29
Speaker 3: So you know what, having your finger on the pulse
27:31
Speaker 3: is going to mean that you're paying less of it
27:32
Speaker 3: and that is such a money when I think we're
27:34
Speaker 3: done here though, Jess, because I don't want to keep
27:37
Speaker 3: talking about tax and I'm just thinking about coffee.
27:39
Speaker 4: So I really do.
27:40
Speaker 3: Hope that this episode has helped ease your woes or
27:43
Speaker 3: at least answer those niggling questions when it comes to
27:45
Speaker 3: tax stuff and investing.
27:47
Speaker 1: It was a really good reminders in there, especially around
27:49
Speaker 1: why waiting that twelve month period is really the hack
27:52
Speaker 1: to getting the most out of your investments? May I
27:54
Speaker 1: say before you take them out? If that is, of
27:56
Speaker 1: course your plan?
27:57
Speaker 3: Not personal advice, never, I just told you what I
28:01
Speaker 3: would want to do personally.
28:03
Speaker 4: And what do we say?
28:04
Speaker 3: Time in the market beats timing the market every single time. Well,
28:08
Speaker 3: my friends, as I said before, that is all we
28:10
Speaker 3: have time for today. But as always, if you have
28:13
Speaker 3: any follow up questions, please hit us up in the
28:15
Speaker 3: Spotify comments. Thank you so much as well to Chase's
28:18
Speaker 3: for making this episode possible, and if you enjoy.
28:21
Speaker 1: This episode, please leave us a Glowing Review. Wherever you
28:23
Speaker 1: get your podcasts, leave a comment in Spotify, make sure
28:26
Speaker 1: you subscribe to you Never miss a Tax time tip,
28:29
Speaker 1: and follow us on Facebook on Instagram. We love hanging
28:32
Speaker 1: out with you guys there as well. We'll catch you
28:34
Speaker 1: later in the week for Friday drinks.
28:36
Speaker 4: Take care fine.
28:40
Speaker 3: The advice shared on She's on the Money is general
28:43
Speaker 3: in nature and does not consider your individual circumstances. She's
28:47
Speaker 3: on the Money exists purely for educational purposes and should
28:50
Speaker 3: not be relied upon to make an investment or financial decision.
28:54
Speaker 3: If you do choose to buy a financial product, read
28:56
Speaker 3: the PDS TMD and obtain appropriate financial.
28:59
Speaker 4: A tailored towards your needs.
29:02
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