You might think the title of today's post is click bait. You would be wrong.
In Australia, it is 100% possible and legal to earn approx $95,000 each and effectively pay no tax once retired. I lie not.
Here is the basic math:
- Dividend income from fully franked Australian shares (think boring, old, safe LIC's) of $95,000.
- Because these dividends are fully franked (30% company tax already paid) they come with $40,714 worth of tax already paid on them.
- That gives a gross income per person of $135,714.
- Submit our tax return for the year and the ATO will calculate a tax bill of approx $37,847
- But wait, we already have a tax credit from franking of $40, 714 !!
- Tax is therefore totally covered and maybe even a refund.
- Walk away with your $95, 000 whistling
- If you are a couple, then walk away with $190,000 whistling a duet.
This is NOT a joke or a hoax or a tax loophole or a dodgy/swifty move. It's real.
Nevertheless, as always, I insist you do your own research and seek independent advice as I am not a financial adviser.
I have purposely inserted this post in the middle of other retirement and investing posts as many folk just glaze over when I start talking about fully franked dividend shares - hopefully this will snap some eyes open and help the penny drop real fast.
Now, back to making my cup of tea and hanging out the towels to sun-dry on the line.
Take care folks and stay nice
Mr HM (Phil)