I'm interested in buying a few shares and holding longer term.
I was wondering about a few options.
Am I better off with a single account or joint account with my wife? Or are we better off putting it in her name since she has a lower income?
Also how about a trust structure? Is it worth it with smaller amounts of money or does it need to be a significant amount? And how do you go about it?
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Will you always be together?
Won't it simply be divided into 2 regardless whose name it is under like also for property, if you are/were a married couple and divorced?
I think there are other factors that can play into asset splits based on what I have hard (mostly if kids are involved). But not all splits happen according to the law anyway. My ex and I split amicably after being together a few years, I earned a fair bit more than she did, and we worked out roughly what each had contributed to mortgages/assets and kept all our own stuff etc. Maybe we are in the minority, but seems like a fair way to split things when no family is involved.
It's actually quite easy to calculate how much tax you'd save. Just do a quick google search for the tax bracket and work out from there.
Also be reminded that if you put a loss on your wife's lower income, you essentially rip yourself off.
Except that a loss of capital gains can't be used to offset your income. It can only be offset from your (current or future) capital gains.
If you don't expect to make capital gains yourself there's no advantage to assigning the loss to the higher income earner.
It can only be offset from your (current or future) capital gains.
Is there a max period on how far in the future you can defer capital loss to offset future capital gain?
No, there's no time limit on them, they just keep carrying forward, just have to keep a record of them.
Some info here
If you want it all in your name, and want to be tax effective in the long haul, you go search about your super fund and see if you can buy stock through that.
As mentioned previously by other people, when first starting out, I would try to keep things simple. If you are planning on the long term and thinking of CGT implications, you need to think about the taxable income at time that you sell. At the time, what will be your respective taxable incomes? If you hold it more that 12 months, you (or you and your wife) will likely be eligible for the CGT discount and only be liable for half the nominal CGT.
Even on an income of 180,000+, a gain of $50,000 would result in CGT of $22,500 (on today's tax brackets) but with the discount, $11,225. It would be even less on lower incomes.
(I would recommend if you are on a reasonable income to get the advice of financial professional, in order to structure your investments to be tax effective).
In recent years, the brackets are being pushed and Australians are generally paying lower tax. The numbers you are looking at now may not be relevant in the future, so I guess you have to ask yourself is it worth all the calculations and assumptions for small sums, when we are trying to look years into the future.
Trust structures do have overheads of ATO reporting and would likely not be useful for reducing tax for small amounts.
another thing that may interest you, is if you wish to forego any dividends entirely.
invest in this https://www.afi.com.au/shareholders or other DSSP holdings, which effectively just give you free shares instead of dividends.
as far as your post goes, its impossible to plan perfectly. If you have everything in your wifes name who earns less, who is to say in 10 years you cant work sue to illness and she is then the bread winner. I would just go with what seems most likely.
which effectively just give you free shares instead of dividends.
That's income
no it is not
Turns out I'm wrong, I still can't figure out how this isn't the same as getting a 100% discount on shares but asx.com.au says you are correct
you are getting 100% discount, but you havent sold it. when you sell it you pay cgt on the entire share value.
@deme: With DRP your new share cost base is not zero. You already paid tax on that dividend. You also get tax credit.
With DSS your new share cost base is zero. You have not paid tax on those. you don't get tax credit.
Investments under the low income earner would make sense purely from a tax perspective IMO.
Will your wife always have a lower income/be in a lower tax bracket? Will you always be together? Things change, and it's impossible to know what will work best longer term. I personally just went with a single account in my name and decided not to overthink it. Maybe I would have thought different if there was more than one tax bracket between us (i.e. if you earn $180k+ and they don't work), then the difference would be significant.
I haven't looked at Trust structures, but I would imagine that it would only be worthwhile if you are in the highest tax bracket/if the values are significant. The only people I know who have done this are partners at big 4 consultancies. They get paid into trusts/put investments there and can then "pay" their other half/kids from the trust. I don't know the details of this, but given they would probably earn $400k+ their situation is quite different from most (there are also company liability issues for them that makes the trust structure beneficial).
TLDR: I seriously doubt that a trust structure would be beneficial for the average retail investor, but ask a professional for advice.