Tax Minimisation Strategy #3 – Positive gearing investments – in lower income earners name
Tax Minimisation Strategy # 3 – Positive gearing investments – in lower income earners name
A positive geared investment occurs when income is greater than financing and maintenance costs, so there is a profit. To minimise tax, positive geared investments should be placed in low-income earners name, a trust and sometimes a company.
If there is a future capital gain, being in the lower income earner’s name will help reduce capital gain tax (or if in a trust, allow capital gains to be distributed to low income earners in that year). Please note that capital gains in companies don’t get access to the 50% capital gains tax free amount that individuals and trusts can get access to.