Maximising your share portfolio
December 14th, 2011 | Consumer News, Financial Planning News, Tax Advice and Updates
When we consider purchasing shares we generally think about capital growth. That is, whether the share price has gone up or conversely, gone down. If you are considering investments that provide steady income, Australian Industrial Shares may be a solution. The Australian Industrial Share price may rise or fall, but generally they continue to pay dividends to shareholders. For example, the dividend return of the S&P/ASX 300 Industrial index was 5.6% for the financial year ending 30 June 2011.
Most of us will be familiar with the much publicised mining boom and the demand for our resources in China. However, if we are looking for an income return the dividend yield of the S&P/ASX Resource index was only 2.2% for the financial year ending 30 June 2011.
Another benefit of Australian dividends are the franking credits. That is, the shareholders of shares in Australian companies receive a taxation benefit for taxes paid by those Australian companies.
If you have a Self Managed Superannuation Fund and that fund receives $70,000 of fully franked dividends not only will that superannuation fund pay no tax on that income but it will receive a refund for the surplus franking credits as illustrated below.
Dividend income (cash received) $ 70,000
Franking credits $ 30,000
Taxable Income $100,000
Tax payable by a Self Managed Super Fund $ 15,000
Less franking credits ($ 30,000)
Net Tax Refund ($ 15,000)
Note in the example above the superannuation fund has paid not one cent of tax yet it will still receive a refund of $15,000 as a result of investing in Australian companies that pay fully franked dividends, as the Australian Companies in their own right, pay the tax.
With regard to your investments, it is essential to get the strategy and product mix right. So if you think that dividend strategies are appropriate for your particular circumstances, you should speak to us.
Here at The Quinn Group our experienced team of Financial Planners, Accountants and Lawyers can provide you with the total solution and assist you with all your share portfolio needs. For advice about the investment product mix that is right for you and to get the best chance at the lifestyle you want, contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.