RE: Investment Bond. If you pay 30% as you go and then no tax at the end wouldnt it be best to invest in a lower dividend option and focus more on cap gain, such as an international VGS style option?
Hi Irene, lovely content. Ciuld you please clarify about the minor tax rate? If the tfn js the parents then this tax rate shouldn't apply right? Also is this just on the dividends? If they are reinvested does it still apply? I think not. Id be glad if you could clarify this better please Thsnk uou.
The minor tax rate applies when the investment is in the child's name with their own TFN. If the TFN used is the parent's (i.e., the investment is held under the parent's name), then the parent's marginal tax rate applies instead. The tax is generally applied to distributions (dividends and other taxable income), even if they are reinvested via a DRP (Dividend Reinvestment Plan). Reinvesting doesn't change the fact that the income was earned-it just means you're using it to buy more units instead of taking it as cash. Here is the link for more details about minor's tax rate www.ato.gov.au/tax-rates-and-codes/tax-rates-if-you-re-under-18-years-old
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RE: Investment Bond. If you pay 30% as you go and then no tax at the end wouldnt it be best to invest in a lower dividend option and focus more on cap gain, such as an international VGS style option?
Hi Irene, lovely content. Ciuld you please clarify about the minor tax rate? If the tfn js the parents then this tax rate shouldn't apply right?
Also is this just on the dividends? If they are reinvested does it still apply? I think not.
Id be glad if you could clarify this better please
Thsnk uou.
The minor tax rate applies when the investment is in the child's name with their own TFN. If the TFN used is the parent's (i.e., the investment is held under the parent's name), then the parent's marginal tax rate applies instead. The tax is generally applied to distributions (dividends and other taxable income), even if they are reinvested via a DRP (Dividend Reinvestment Plan). Reinvesting doesn't change the fact that the income was earned-it just means you're using it to buy more units instead of taking it as cash.
Here is the link for more details about minor's tax rate www.ato.gov.au/tax-rates-and-codes/tax-rates-if-you-re-under-18-years-old
Cant belive the tax rate for under 18 year old = 66%