Understanding tax

Investors need to consider the tax implications for the investments they hold, however, it isn't wise to base any investment decision on tax effectiveness alone.

Understanding how investments are taxed and what tax planning strategies might be suitable for your situation is an important part of making informed investment decisions and keeping on the right side of the ATO.

How is investment income taxed?

Investment income explained

If you own any investments you usually receive some sort of income from those investments. Learn more about how investment is taxed here.

Investment income

Find out from the ATO about the investment income you must declare.

Investment income deductions

You can claim a deduction for expenses incurred in earning investment income.  Find out more from the ATO about Interest, dividend and rental property investment income deductions.

Capital gains tax

If you sell an asset, such as property or shares, you usually make a capital gain or a capital loss. Capital gains tax is not a separate tax, the gain is generally added to your other income and you usually have to pay tax at an increased marginal tax rate. Learn about how capital gains and losses affect the tax you pay from the ATO.

Strategies to reduce tax

Tax planning strategies

Here are some ideas on ways to legally minimise the tax you pay.

Tax planning

You have the right to arrange your financial affairs and investment to keep your tax to a minimum. This is often referred to as tax planning.

 Learn more about the ATO's view on legitimate tax planning as well as tax avoidance schemes.

Donating shares: ShareGift Australia

Learn more about donating shares to ShareGift Australia;  the only service of its kind in Australia that converts share parcels to cash and aggregates the proceeds to distribute to charity. 

Make tax work for you

Consider the tax implications of any investments. While lower tax can help your wealth grow faster, you should never base an investment decision on tax benefits alone. Moneysmart provides some guidance about what makes some investments more tax-effective than others and includes a video from Paul Clitheroe on tax avoidance schemes.