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Old 21-09-2011, 10:24 PM   #31
dave289
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Default Re: Investing cash?

Quote:
Originally Posted by Pis-ton broke
As I understand it , the op. is due to pay capital gains? tax on a property.
And are you saying that ,if its put in to an investment , even a provitable one, for over one year then the capital gains is reduced?

I,m unaware of tax rules on investments. you have many links, do you know of a good one, so as i can learn some of this stuff. as i have just invested some money in woolsworths shares.

cheers mick
If you were referring to your shares mick then the answer is yes , if you were to hold them for over a year ,you will only pay tax on half the profit .

some examples for you : If you bought your woolworths shares for $20 dollars and held them for a year or more and sold them at $30 dollars , this would be the outcome . say you bought $50,000 dollars worth , you sell them 13 months later for$30 ,you know have $75,000 . so $25,000 is considered capiatal gain , if you have held it for over a year the amount you pay capital gains tax on is reduced by half ,so you only pay tax on $12,500 while still holding your $62,500 . if you were to sell out in six months time at $30 you will pay capital gains tax on the whole $25,000 profit.

So if you earn say $75,000 in your job a year , and sell your shares after one year you will pay tax on $87,500 for that financial year . If you held them for only six months but sold them at $30 your taxable income would be $100,000 for the financial year.

Now that is for a capital gain , I will briefly explain capital loses while I am here.

If I bought the shares for $20 like before and they went to $10 dollars and I sold that would be a capital loss . my initail $50,000 investment would now be worth $25,000 ,so I have had a capital loss of $25,000 . Now heres the thing , you cannot offset a capital loss against your wages , meaning you just pay your normal amount of tax on the wage for your job . You can only offset a capital loss with a capital gain , If I had some other shares shares that made a profit and had a capital gain of $25,000 I could offset this against my capital loss and effectively pay no tax on the shares that profited.

Or if you owned an investmant property and sold it for a profit you can offset your capital gain on the property against your capiatl loss from the shares and reduce the amount of tax you pay on the investment. If you have shares and sell them at a loss you can offset this with a any gain you make even years down the track . so I might make a loss one year , but if I sell an investment property or shares seven years later and make a capital gains pofit I can offset this from my loss seven years ago , I dont know exactly what the time frame to use this up is , it may be eternally , but I am not sure about that , you will have too look into that yourself.
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Old 21-09-2011, 10:28 PM   #32
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Default Re: Investing cash?

My advice would be don't both listening to the (generally conflicting) advice on a car enthusiast forum and find a (good) financial planner like you mentioned in your OP.
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Old 22-09-2011, 06:59 AM   #33
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Default Re: Investing cash?

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Originally Posted by naddis01
My advice would be don't both listening to the (generally conflicting) advice on a car enthusiast forum and find a (good) financial planner like you mentioned in your OP.


Financial planners are the scourge of the Australian investment community.

They prey on people like retirees, the aged, the too trusting .....
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Old 22-09-2011, 08:12 AM   #34
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Default Re: Investing cash?

Quote:
Originally Posted by z80
Financial planners are the scourge of the Australian investment community.

They prey on people like retirees, the aged, the too trusting .....
Yep, a good financial planner is a contradiction in terms, they get paid regardless of the effectiveness of their advice and they all have their snouts in the enormous superannuation trough.
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Old 22-09-2011, 08:13 AM   #35
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Default Re: Investing cash?

Quote:
Originally Posted by dave289
You guys may find your answers in here you can always ring and speak to somebody if needed. theres about 5 billion pages of info, I just could not be bothered looking into right now.

http://www.ato.gov.au/

One question this thread has raised in my mind is . What if I was to put my money on fixed term deposit for three years paid on maturity . Would the interest paid on maturity after three years then be classed as a capital gain and therefore making half of it free from tax ? anybody , if not I will ring the tax office tommorow as I could not be bothered reading through all the bs in the link above, but it should be very helpfull to others none the less.
The answer is no, interest is interest and is added to your taxable income in the year of maturity in full, whereas capital gains tax is levied on half the profit when sold, if held for more than 12 months.
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Old 22-09-2011, 08:32 AM   #36
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Default Re: Investing cash?

Quote:
Originally Posted by dave289
You guys may find your answers in here you can always ring and speak to somebody if needed. theres about 5 billion pages of info, I just could not be bothered looking into right now.

http://www.ato.gov.au/

One question this thread has raised in my mind is . What if I was to put my money on fixed term deposit for three years paid on maturity . Would the interest paid on maturity after three years then be classed as a capital gain and therefore making half of it free from tax ? anybody , if not I will ring the tax office tommorow as I could not be bothered reading through all the bs in the link above, but it should be very helpfull to others none the less.

No, but I believe banks will credit interest at least annually irrespective of the term of the deposit, so in any given year you will have an amount of interest to include as assesable income. There is no capital gain associated with bank deposits.

Someone mentioned sticking the deposit in the name of a child < 18 years yo. Minors can earn up to $3,334 without having to lodge a tax return, so this is a useful way to do it.
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Old 22-09-2011, 08:33 AM   #37
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Default Re: Investing cash?

Quote:
Originally Posted by z80
Financial planners are the scourge of the Australian investment community.

They prey on people like retirees, the aged, the too trusting .....

Totally agree with that...Most advice is not given at arms length either re: those who are employed by banks
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Old 22-09-2011, 08:49 AM   #38
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Default Re: Investing cash?

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Originally Posted by 5150gk
Isn't that 25% p.a?

Buy a couple of car spaces in the city and then rent them out. You've got an appreciating asset, and a monthly return with virtually no outgoings.
Obviously you haven't done it, differant term deposits with differant lengths and interest rates, plus after X amount you can negotiate your own rates and lengths.
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Old 22-09-2011, 09:05 AM   #39
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Default Re: Investing cash?

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Originally Posted by BrandonJWessels
Obviously you haven't done it, differant term deposits with differant lengths and interest rates, plus after X amount you can negotiate your own rates and lengths.
Interesting.. Any chance you can share the name of the institution returning 25% on term deposits?
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Old 22-09-2011, 09:20 AM   #40
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Default Re: Investing cash?

Quote:
Originally Posted by GT0132
No, but I believe banks will credit interest at least annually irrespective of the term of the deposit, so in any given year you will have an amount of interest to include as assesable income. There is no capital gain associated with bank deposits.

Someone mentioned sticking the deposit in the name of a child < 18 years yo. Minors can earn up to $3,334 without having to lodge a tax return, so this is a useful way to do it.
Thanks gt, I just though that if they say that you are paid on maturity and the term was three years ,then they would not pay you anything until that point because you have signed an agreement for the three years to be PAID ON MATURITY, I suppose the down side to this is you would not get the compounded interest over the years , I will look further into this, but would probably need to speak to both the bank and the tax office . I will try and do this later this afternoon and let you now what the outcome is.

Last edited by dave289; 22-09-2011 at 09:27 AM.
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Old 22-09-2011, 09:26 AM   #41
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Default Re: Investing cash?

Quote:
Originally Posted by xr6wpn
Just seeking a bit of advice before I go to a financial advisor on some money I made last year when I sold my house.
Ive had the money sitting in a savings account but since the tax man wants to take a bit of a share im just wondering what my options are on where to put it for a couple of years so the tax man cant touch it (not real estate).
The sum is around $120,000

Cheers!
I was just reading your post, and from what I am reading you will not be able to avoid paying some Capital Gains Tax. Depending on your age super might not be the ideal solution for you depending how close you are to reaching your preservation age. Even in super you can put it in cash. Also unless you are self employed or some sort of business owner then you are not able to make a deduction on your contributions to super, you also have to remember that there are super contributions caps that you can not exceed.

However back to trying to avoid paying tax, I think you will pay it regardless. You have made money and being an investment property have benefited from receiving tax deductions from your interest and other costs associated with the property. If you have kept the property for longer than 12 months then you get a 50% discount on your CGT and the rest is charged at your marginal tax rate.

For putting the money away at the moment, I would look in to term deposits and also other high interest bank accounts such as, UBank, Rabo Bank....etc The rates these banks have are quite good and very very competitive with term deposits and the benefit is that your money is not tied up for a fixed period.

Look into all of your options
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Old 22-09-2011, 09:26 AM   #42
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Default Re: Investing cash?

Quote:
Originally Posted by Rambunctious
The answer is no, interest is interest and is added to your taxable income in the year of maturity in full, whereas capital gains tax is levied on half the profit when sold, if held for more than 12 months.
What if I buy gold , and keep it for over a year then . I will speak to the tax office later reguarding this also and let you know what happens , sorry I am unfamiliar with both long term deposit accounts and also the in and outs of gold reguarding the tax office as I have never had either but may venture down the path of both shortly , seeing as my long term goals have now been completely changed by the direction of our failing economy . But I am asuming gold would be classed as a capital gain if it was to make a profit ,aand hold it for over a year, much like shares.

Last edited by dave289; 22-09-2011 at 09:34 AM.
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Old 22-09-2011, 09:49 AM   #43
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Default Re: Investing cash?

Quote:
Originally Posted by Blue_XR
I was just reading your post, and from what I am reading you will not be able to avoid paying some Capital Gains Tax. Depending on your age super might not be the ideal solution for you depending how close you are to reaching your preservation age. Even in super you can put it in cash. Also unless you are self employed or some sort of business owner then you are not able to make a deduction on your contributions to super, you also have to remember that there are super contributions caps that you can not exceed.
The way I interpreted the OP's question . It was not so much he is looking for an avenue to reduce or eliminate CGT. It was more to do with where he should invest the sale proceeds to get an optimum return and reduce the tax he will pay on any income earned from that investment.

If the property sold was a place of residence then CGT is a non issue . However if it was an investment held over 12 months then 50% of teh sale price over cost base will be assessable as a capital gain. The only way this can be reduced is to utilise any prior capital losses to offset it against. There is no rollover relief on CGT if for example the proceeds are used to buy another investment property unlike when you sell and buy another business
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Old 22-09-2011, 09:53 AM   #44
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Default Re: Investing cash?

Quote:
Originally Posted by dave289
What if I buy gold , and keep it for over a year then . I will speak to the tax office later reguarding this also and let you know what happens , sorry I am unfamiliar with both long term deposit accounts and also the in and outs of gold reguarding the tax office as I have never had either but may venture down the path of both shortly , seeing as my long term goals have now been completely changed by the direction of our failing economy . But I am asuming gold would be classed as a capital gain if it was to make a profit ,aand hold it for over a year, much like shares.

Gold is not exempt from CGT . Unless you are in the business of gold trading in which case gold held is deemed as trading stock, then any profit made is assessable as ordinary income, not as a capital gain.
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Old 22-09-2011, 11:11 AM   #45
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Default Re: Investing cash?

Quote:
Originally Posted by BrandonJWessels
Obviously you haven't done it, differant term deposits with differant lengths and interest rates, plus after X amount you can negotiate your own rates and lengths.
Well put up or shut up! Anybody can put principal amounts in different banks, terms and interest rates, but at the end of the day, i'm still only going to average 6-7% p.a? No need to effing me either! If everybody could turn $80k into $125k in 2 years in no risk bank deposits, none of us would work?
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Old 22-09-2011, 11:34 AM   #46
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The last warning, keep it civil and on topic or it will go along with those who caused it......
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Old 22-09-2011, 11:57 AM   #47
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Default Re: Investing cash?

xr6wpn, i hope you see this through the 'noise' in this thread, but to answer your opening post:

It's all about accessability and risk. Seriously, if you're wanting a risk-free avenue where you will have your money grow and be available at any time being worth the same amount as it started as if not more, then the bank is the best place. The only thing wrong with the bank is that you have to pay tax on the investment income, as you know.

Every other opportunity is not risk-free. Yes you may make better gains at less expense, but you are giving away accessability, and your money is not guaranteed to be worth the same amount as it was yesterday.

And you've got to look at what those things affect - the emotional toll. Having $120k being affected by things outside your control is not an easy thing to do.

As hurtful as it seems, paying the tax to the government most likely is the least painful option.
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Old 22-09-2011, 12:00 PM   #48
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Default Re: Investing cash?

Any profit making undertaking or plan is subject to CGT, unless of course it is in the course of business (as per GT's post)... There are some exemptions but they are for cars, awards, personal use assets etc.
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Old 22-09-2011, 01:40 PM   #49
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Default Re: Investing cash?

Quote:
Originally Posted by Mr Hardware
xr6wpn, i hope you see this through the 'noise' in this thread, but to answer your opening post:

It's all about accessability and risk. Seriously, if you're wanting a risk-free avenue where you will have your money grow and be available at any time being worth the same amount as it started as if not more, then the bank is the best place. The only thing wrong with the bank is that you have to pay tax on the investment income, as you know.

Every other opportunity is not risk-free. Yes you may make better gains at less expense, but you are giving away accessability, and your money is not guaranteed to be worth the same amount as it was yesterday.

And you've got to look at what those things affect - the emotional toll. Having $120k being affected by things outside your control is not an easy thing to do.

As hurtful as it seems, paying the tax to the government most likely is the least painful option.
I think this pretty much sums up the current situation as far as investing your money goes right now , well done Mr hardware. I would just like to add to the last sentence, being that while it might be painfull to pax tax on your interest , it should not be as painfull as paying tax on your wage for which you have to actually work to get , rather than your interest growing while you are sitting on the lounge or sleeping in your bed . So not so bad if you can try and look at things a bit differently.
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Old 22-09-2011, 01:56 PM   #50
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Default Re: Investing cash?

Hey all the money was made off a house I had built and lived in for 6 years, im 25yo so super really isnt an option.
Thanks to all for their input, I was hoping to find an easy option to avoid some tax but I might just leave it where it is, at least I know it is safe.
Cheers, Dan
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Old 22-09-2011, 03:29 PM   #51
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Default Re: Investing cash?

Quote:
Originally Posted by xr6wpn
Hey all the money was made off a house I had built and lived in for 6 years, im 25yo so super really isnt an option.
Thanks to all for their input, I was hoping to find an easy option to avoid some tax but I might just leave it where it is, at least I know it is safe.
Cheers, Dan
If you are only 25 years old you could easily take the same risks as a lot of us have done with our superannuation over the last 10 years,( which we were told was as safe as houses.... )

Except with the "investment" option I propose you stand to double your money in an afternoon, (whereas we were bled slowly while hanging on hoping for a recovery....)

So...if you are only 25 y.o and don't mind doubling your money with absolutely no tax whatsoever when your "investment" matures...

It's called betting on red or black....and far better than super has been recently...

With 120k to play with if you lose the lot you will still have lost far less than my super did in the GFC...
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Old 22-09-2011, 04:17 PM   #52
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Default Re: Investing cash?

Now - before ALL of you dismiss what I'm about to say... lets remember that this advice is coming from a Car Enthusiast - to Another Car Enthusiast (OP).

If it was my money, I'd be looking for an XW GT HO (PH1 or PH2) and the best/most original one I could find for my $120k...
(Can already see everyone walking towards the door - but hear me out...)

If you put your $120k into a 6% interest earning account - sure it's safe as houses - and will earn you roughly $40k over 5 years or $100k over 10 years... You will have to pay tax on the interest of course - as you know... But either way you are still in front, and if anything happened - you could access your money (emergency reasons - or whatever). This is a SAFE option and means you really can't lose overall - even when you pay tax.

OR - There is The GT HO option.

With $120k today - you could buy a VERY good PH1 or PH2 GT HO.
What will the car be worth in 5 years? or 10 years? Most likely more than you will get on your interest saver account over the same period.

Based on What??

10 years ago - you could buy a XW GT HO for about $38k-$40k... Even in todays slow classic car market - it would be worth roughly TRIPLE what you paid for it 10 years ago.... (and in the peak it was worth approx $250k - rougly 6 times the purchase price)...

Take into account the cost of insuring, storing, and maintaining the car - it will be similar to the amount you would have paid in tax on the interest earned from your 6% savings account.

If anything was to happen to the car (stolen, torched, crashed, etc etc) you would have an insurance policy on the car at an inflated price - (get the agreed price updated/valued every time you renew the policy) So when you buy it at $120k - its insured at $150k... when it's worth $150k - its insured at $200k... and no matter what happens to the car - you're covered.

In 10 years - what do you think the car will be worth (assuming you are doing less than 1000 miles a year and you keep it in top shape) ??
If your answer to this question is more than $220,000 - then you would have made more than your 6% savings account.

10 years ago - nobody would have believed you if you told them that a PH1 or PH2 was gonna be worth 'hundreds of thousands'... and it happened...
Just like real estate, classic and collectable cars have increased (overall) in value over the years.... and will continue to increase overall...

So - my prediction... in 10 years... A PH1 or PH2 will be worth north of $300k... it was only 3 years ago that they were nearly worth that anyway... (during a spike/fluctuation that has since corrected itself)... GT HO Falcons are different to most other cars, as they have always - and will continue to appreciate in value... This cannot be denied or argued...

So - when you decide to sell your PH1 or PH2 in 10 years... How much TAX do you pay??? Zero....

It's not quite as safe as the interest saver - agreed... But with the greater risk comes the greater reward...

Would you have enjoyed your investment? Hell Yes...

Thats my opinion - for what it's worth.... (PUN INTENDED)
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Old 22-09-2011, 06:39 PM   #53
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Default Re: Investing cash?

Thanks Dave289 for your detailed information, it,s good in know some useful info. I just haven,t had time to research (wade throught screens of tax info.) tax rules. cheers mate.

Quote:
Originally Posted by nuthin' fancy
Yep, a good financial planner is a contradiction in terms, they get paid regardless of the effectiveness of their advice and they all have their snouts in the enormous superannuation trough.
i get that. i had a bad experience with one. After selling a managed portfolio, i was informed that the adviser did NOT invest the money for some months. I did get compensation, the bank just credited me. And it was a big four bank too.
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Old 23-09-2011, 06:58 AM   #54
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Default Re: Investing cash?

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Originally Posted by Pis-ton broke
Thanks Dave289 for your detailed information, it,s good in know some useful info. I just haven,t had time to research (wade throught screens of tax info.) tax rules. cheers mate.
No worries mate ,glad to help. I would be very very wary of your shares , you were thinking along the right lines by buying woolworth shares ,because everybody will still need to shop at the supermarket and buy alcohol and petrol , but the reality is it will take a big hit like evrything else will , just watch what happens today, could get messy.

@ loftie , sorry to say mate , but muscle cars will be coming down along with everything else . But I still wont be selling mine cause I could not care less if its worth $1,000,000 or $1 . So here I am selling my house of 17 years , but could never sell my beast , glad to see I have my priorities right .
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Old 23-09-2011, 04:26 PM   #55
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Default Re: Investing cash?

Just keep it in a savings account earning interest. I love seeing "investors" lose their cash around me recently and my savings untouched in my account.

Investing is bad IMO.
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Old 23-09-2011, 04:32 PM   #56
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Default Re: Investing cash?

Quote:
Originally Posted by Road_Warrior
Chuck it into your super?
Eeeek, for several reasons, but one of which is the current turmoil.
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Old 23-09-2011, 06:41 PM   #57
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Default Re: Investing cash?

Another good reason NOT to put money in Superannuation. Scroll down to "Why are the fees increasing"

The first paragraph especially the $.5mill to the Govt for fraud in another fund.

AGEST= Aust Govt Employees Superannuation Trust

http://www.agest.com.au/latest-from-...ange/index.cfm
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Old 23-09-2011, 06:46 PM   #58
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Default Re: Investing cash?

Superannuation is a good thing, but not the topic of the thread.
It's useless for the OP's purposes as at 25 years old, locking your money in until you're 60 is a bad idea.
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Old 26-09-2011, 04:48 AM   #59
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Default Re: Investing cash?

How is tax calculated here on a term deposit or savings account which pays 6% interest? Same as any other income from employment?

Say you put in 100k with interest earned each year, how much would be taken away by tax?
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Old 26-09-2011, 06:37 AM   #60
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Default Re: Investing cash?

Quote:
Originally Posted by Bobman
How is tax calculated here on a term deposit or savings account which pays 6% interest? Same as any other income from employment?

Say you put in 100k with interest earned each year, how much would be taken away by tax?
Yes, same as any other income from employment, the income from the deposit is added to your taxable income for the year in which it is paid.
If for example you placed $100,000 in a term deposit today for 12 months with the interest being paid on maturity, then the interest would be paid to you in September next year(2013) so it would be added to your income for 1st July 2012-30 th June 2013 year tax return.
However if you only put it in for 6 months then it would be added to this years (2011-2012) return.
These are the tax rates so add the interest to your taxable income and do the calculations.
http://www.ato.gov.au/individuals/co...tent/12333.htm
Then add the 1.5% medicare levy onto your tax payable.
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