The conversations that rarely happen, and why the answers can matter more than you might expect.
For high income earners, some of the most valuable conversations about tax planning are the ones that never happen. Not because the opportunities do not exist, but because the right questions are never asked. The complexity of managing wealth at this level means that significant areas can go unexamined, year after year, simply because no one raised them.
This article is not a source of tax advice. Barker Wealth provides portfolio planning services and we are not tax advisers. What we have observed, in working with high income earners over many years, is that certain conversations with qualified tax professionals tend to unlock meaningful outcomes. The five areas below are worth raising with your accountant or tax adviser before the end of the financial year.
Question 01: Are You Making the Most of Your Superannuation Contribution Caps?
Superannuation remains one of the most tax-advantaged structures available to Australian investors, yet many high income earners are not using their contribution caps as effectively as they could. The concessional contributions cap and the non-concessional contributions cap set annual limits, but unused concessional cap amounts from prior years may be eligible to carry forward under rules introduced by the ATO in recent years.
It is worth asking your tax adviser whether your current contribution arrangements are appropriate for your income level and whether any carry-forward opportunities are available before 30 June. The interaction between income level, the Division 293 tax, and contribution strategy can be nuanced and is worth reviewing annually rather than setting and forgetting.
For guidance on current caps and eligibility, the ATO’s contributions page is the authoritative source.
Question 02: Have You Explored Whether Debt Recycling Is Appropriate for You?
Debt recycling is a strategy that many high income earners have heard referenced but never fully explored with their advisers. In broad terms, it involves the gradual conversion of non-deductible personal debt, such as a home loan, into investment debt, which may give rise to a tax deduction for the interest component.
The mechanics of how this works, and whether it is appropriate for a given individual, depends heavily on personal circumstances, risk tolerance, existing asset and liability structure, and investment time horizon. It is not a strategy that suits everyone, and it carries risks that should be understood clearly before any action is taken.
The conversation to have with your tax adviser is a simple one: given my current debt position and investment goals, is debt recycling something worth modelling for my situation? If your adviser has not raised it, it is worth asking directly. The ASIC MoneySmart resource on investment strategies offers a useful starting point for understanding the general landscape.
Question 03: Is Your Family Trust Distribution Strategy Being Reviewed Each Year?
If you hold investments or business income through a discretionary family trust, it is important that your distribution strategy is being reviewed annually by your accountant. The rules governing how trusts can distribute income to beneficiaries have been subject to increased ATO scrutiny in recent years, and approaches that were once straightforward are now subject to more careful consideration.
The ATO’s guidance on trust distributions has evolved, and the interaction between trust income, the adult beneficiary rules, and family group arrangements warrants specific professional attention. This is not an area where a historical approach should be assumed to remain appropriate without review.
The question to raise with your accountant is whether the distribution resolutions for the current year have been properly documented and whether the current approach remains sound in light of any ATO guidance updates.
Question 04: Are You Planning Around Capital Gains Rather Than Reacting to Them?
Capital gains events are often treated as something that simply happens, with tax as an unavoidable consequence. In reality, many capital gains can be anticipated well in advance, which creates the opportunity to approach them thoughtfully rather than reactively.
There are a number of areas worth discussing with your tax adviser before any planned disposal of assets. Whether there are unrealised losses elsewhere in your portfolio that could be considered in the same year. Whether deferring a gain to a different financial year would result in a meaningfully different tax outcome. Whether any assets have been held for sufficient time to qualify for the 50 per cent CGT discount available to individuals who have held an asset for more than twelve months.
These are not complex questions, but they are ones that benefit from being asked early in the financial year rather than after a transaction has already occurred. The window for planning closes at the moment of sale.
Question 05: Do You Understand How Investment Bonds Might Fit Your Long Term Picture?
Investment bonds, sometimes referred to as insurance bonds, are a structure that tends to receive relatively little attention in mainstream financial conversations, despite being available to Australian investors for many years. They are worth understanding, particularly for those investing on a longer time horizon with estate planning considerations in mind.
The general characteristics of investment bonds are well documented by ASIC’s MoneySmart, and the tax treatment after a ten year holding period is something your tax adviser or financial planner can explain in the context of your overall position. Whether this type of structure is appropriate depends entirely on individual circumstances.
The question worth raising is simply whether it has been considered. For some high income earners, it will not be relevant. For others, it may be a vehicle that warrants serious attention. The only way to know is to have the conversation.
Good wealth planning and good tax planning work best when they are connected. Understanding how your portfolio sits within your broader financial picture is where we believe the most meaningful conversations begin.
At Barker Wealth, we specialise in portfolio planning for high income earners. If any of the questions above have prompted a thought worth exploring in the context of your investment portfolio, we would be glad to hear from you. We do not provide tax advice, and we would always encourage you to work closely with a qualified accountant or tax adviser on the matters raised above. What we can offer is a considered view of how your portfolio strategy connects to the bigger picture.
To speak with a member of our team, visit our contact page or explore our advisory services.
This article is intended for general informational purposes only and does not constitute financial product advice, legal advice, or tax advice. The information provided is based on general principles under the Corporations Act 2001 (Cth) and may not apply to your individual circumstances. Always consult a licensed financial adviser and a qualified accountant before making investment decisions. Past performance is not a reliable indicator of future performance.