It’s Not Just What You Invest In, It’s Where You Hold It

When people think about investing, the first question is usually what should I invest in. Shares, property or alternatives tend to dominate the conversation. But for many investors, particularly those with $1 million to $5 million in wealth, the more important question is where those investments should sit. Because the structure you invest through can have an equally important impact on your outcome as the investment itself.

Superannuation: Tax Effective, But Restricted

Superannuation remains one of the most tax effective environments available. Earnings are taxed at concessional rates and can become tax free in retirement, which can significantly enhance long term compounding. The trade-off is access. Contribution limits and preservation rules mean capital may be preserved until age 60 or 65 depending on your employment.

Personal Ownership: Flexible, But Tax Exposed

Holding investments in your own name provides complete flexibility and access to capital at any time. This can be important for opportunities, lifestyle needs or managing debt. However, income and capital gains are taxed at marginal rates, which can be significant for higher income earners.

Trust Structures: Control and Distribution

Trusts allow income to be distributed across family members and can support broader estate planning objectives. This can improve overall tax outcomes and provide control over how wealth is managed over time. That said, they introduce complexity, cost and require ongoing management.

Company Structures

Company structures can play an important role, particularly for those with surplus cash flow. Income is taxed at a flat rate, typically up to 30%, which may be lower than personal rates. In some case, this can allow earnings to be tax deferred, often through the use of a corporate beneficiary. When profits are eventually distributed, further tax may apply depending on the individual’s position.

A Changing Tax Landscape

Tax settings do not stand still. Ongoing discussion around the potential reduction or removal of the capital gains tax discount highlights that personal and trust structures may become less favourable over time.

Bringing It Together

Well structured portfolios are rarely built within a single environment. Instead, they use a combination of superannuation, personal ownership, trusts and companies, each serving a different purpose. In the end, it is not just about what you invest in. It is also about where you hold it.

If you’re reviewing how your investments are structured, a considered approach can help ensure each component is working toward your broader objectives. Start the Conversation.