7 June 2012

Dear Investor,

With the end of financial year fast approaching, it is time to once again review your financial arrangements and consider the steps that you may be able to take to minimise your tax obligations. Some of the common tips for investors are listed below:

Prepay interest on investment loans

Some lenders allow borrowers to prepay interest on investment loans. Where this is the case, the prepayment of interest may enable you to bring forward the interest expense to offset taxable income. Prepaying interest can also allow you to ‘lock in’ a fixed rate of interest, providing budget certainty. Investors should be aware that lenders may charge a fee for the prepayment of interest and should consider this expense in any decision.

Manage capital gains and losses

Investors should seek advice as to whether carried forward capital losses can be used to offset capital gains realised during the year. Similarly, selling securities that you have held for at least twelve months (that qualify for the 50% CGT discount) may be a relevant strategy to utilise any capital losses that you may have incurred. In addition, deferring or bringing forward the planned sale of an asset may be beneficial depending on your individual circumstances.

Maximising deductible expenses

Investors should ensure that they are maximizing the deductions they are able to claim from expenses incurred in earning assessable investment income. Expenses that you may be able to claim include fees for financial advice, account keeping and management fees and interest payments on investment loans. Income protection insurance may also be tax deductible.

Reviewing your income protection

Income Protection Insurance is an important consideration for those clients with families, outstanding debts and/or a single main income earner. The Australian Taxation Office generally allows the cost of any premiums paid to insure the loss of your income to be claimed as a deduction. In addition, premiums pre-paid for up to twelve months in advance may be deductible in the year that the expense is incurred.

List your rental property deductions

Landlords can claim deductions for a range of expenses such as advertising, bank charges, body corporate fees, cleaning, council rates, electricity and gas, gardening, insurance, loan interest, land tax, lease preparation expenses, legal costs, pest control, postage and stationery, property agent fees, telephone charges and water rates. You may also be able to write off the cost of certain buildings, depreciating assets and borrowing costs over time.

Superannuation strategies including additional contributions

Superannuation provides a tax-efficient environment for your retirement savings. Depending on your personal circumstances, increasing the amount of wealth you hold through superannuation by making additional contributions, either through salary sacrifice or lump sum contributions, may be worthwhile. It is important to double check your super contributions to date to ensure you maximise but never exceed the legislated limits. Exceeding a contributions limit can result in a significant tax penalty (up to 93%).

Optimise your tax offsets

Tax offsets directly reduce your tax payable and can add up to a sizeable amount, so it pays to know all the offsets to which you are entitled. Eligibility for offsets will generally depend on your income level, family circumstances and other relevant conditions associated with particular offsets or rebates. Common tax offsets include the dependant spouse rebate, low-income tax offset, mature-aged worker rebate, senior Australian tax offset, medical expenses offset, private health insurance offset, the entrepreneur’s tax offset and the offset for superannuation contributions made on behalf of a low income spouse.

As always, the above tips are a guide only and you should consult your accountant, financial adviser or taxation professional before acting on any of the comments presented in this newsletter.


Best regards,
Chris Andrews

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Chris Andrews
Head of Funds Management

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e  candrews@latrobefinancial.com.au

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La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 145 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.

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La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. The PDS is available on our website www.latrobefinancial.com.au or by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you.
* The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund, and may achieve lower than expected returns. Past performance is no guarantee of future performance. Investors risk losing some or all of their principal investment.
- Withdrawal rights are subject to liquidity and may be delayed or suspended.
- The award and ratings were given to the Pooled Mortgages Option within the La Trobe Australian Mortgage Fund.
The rating is only one factor to be taken into account in deciding to invest.
1. Zenith's "recommended" rating indicates that it has high confidence in the manager meeting its objectives. The Zenith. Investment Partners ("Zenith") ABN 60 332 047 314 rating referred to in this document is limited to "General Advice" (as defined by section 766B of Corporations Act 2001) and based solely on the assessment of the investment merits of the financial product on this basis. It is not a specific recommendation to purchase, sell or hold the relevant product (S), and Zenith advises that individual investors should seek their own independent financial advice before investing in this product. To view the relevant research information, please visit www.latrobefinancial.com.au The rating is subject to change without notice and Zenith has no obligation to update this document following publication. Zenith usually receives a fee for rating the fund manager and product against accepted criteria considered comprehensive and objective.
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