What is the Best Tax Effective Investment

By far the best tax effective investment is to put your money into superannuation. Outside of super your money is taxed at the marginal rates of 31.5% or 46.5%. Within super the tax rate is 15% on your deposits, and two thirds of your capital gains attract tax of 15%.

However, it is still possible to reduce your taxes considerably when investing outside of super by the use of franking credits and concessional gains tax. If a company you invest in pays dividends it comes from their profits that have already been taxed, therefore you get franking credits that you can apply to your other capital gains.

You can also save a great deal in tax by investing in real estate, if you know how to do it - or your financial advisor knows. While your investment choices should not be made solely on how much tax you will save, this does come into the equation. While the ATO can be trusted to tell you all the ways in which you should be paying tax, they are not likely to ring you with the information that you've missed claiming something. It is up to you to source this information - it is freely available from the ATO or your accountant if he knows his stuff. Experts tell us it is possible to pay almost zero tax when investing in the right real estate.

Mel writes about self managed superannuation,and other Tax Effective Investment opportunitiesand gives helpful tips about financial matters.