This collection of income calculators enables the adviser to quickly ascertain the income and capital gains tax that a client is paying and how to use their income more effectively to grow wealth.
Many Australians do not understand how they are taxed. The income tax calculator shows quickly and easily, in pictorial form, the different tax brackets that your client’s income falls into and how the higher taxed income may be used more effectively using different strategies.
For example, the adviser could use the graphs to explain why it might make sense for tax effective investments to made in the client’s name as the client is currently being taxed in the highest tax bracket (in this example 47%); and an income producing investment could be made in the partner’s name as they are being taxed at a lower rate (in this example 32.5%)
The total net (after tax) income can also be used to determine how much money the client is spending and can lead to a discussion on budgeting or used to determine how much life insurance the client needs to provide for their family in the event of the loss of an income earner.
The income split calculator shows graphically the possible tax savings to the clients combined income should an appropriate portion of one partner’s income be split off to the other’s.
Couples that run a small business together may be able to split their income if, for example, one partner runs the business and the spouse completes the bookwork and administration.
The salary sacrifice calculator is an education and modelling tool that enables the adviser to show how an amount of pre-tax income can be sacrificed into superannuation and the initial tax savings benefits.
The potential long-term benefits of the strategy can then be shown graphically taking into account the relevant tax rates, contribution limits and affordability. The accumulated benefits can then be stress tested by applying alternate levels of investment returns.
The capital gains tax calculator allows advisers to explain how CGT is calculated and quickly and easily estimate the value of any CGT on the sale of an asset. Strategies can then be explored to reduce the impact of CGT and save the client money.