Which Name Should Doctors Invest In?

Yves SchoofBusiness

With so many doctors now looking to invest, one of the first questions to ask yourself is, in which entity or person’s name should we invest?

The main issues to consider in that respect are:

  • Tax implications: income and capital gains tax, possible deductions
  • Asset protection: ideally you would not be exposing your investments to risk

 

So let’s look at some of the more common options.

 

Personal name

This might be the most obvious option available to you if you are single for example, and if you have only limited funds to invest. Obviously, there is no asset protection here, and the tax outcomes will also not be that great if you are on a high tax rate.

 

Spouse’s name

This could be a better alternative, due to accessing a lower tax rate, and also to increase asset protection, assuming your spouse does not have an at-risk occupation.

However, this obviously might give you little or no control over the actual investment itself.

 

Investment Bond

If you are both on a high tax rate as a couple, or both in risky professions, then this might be an option. Investment and education bonds have a maximum tax rate of 30% and offer asset protection. However, they are less flexible in terms of what you can invest in (pre-selected managed funds), and there are also limitations in terms of annual contributions. There is also an administration cost for the investment bond structure.

This might be good if you want a simple, set and forget strategy by way of direct debit.

 

Trust

A trust provides tax planning options as well as asset protection benefits. It also allows you to control the assets, without really owning them. You can invest pretty much in whatever you like.

The main disadvantage is the set-up and ongoing costs in terms of annual tax returns, etc.

Also, the main tax benefit will only really apply if you have tax-effective beneficiaries such as adult children who are still dependant.

If you have a sizeable amount to invest and plan to add to this over time, the initial and ongoing costs might become marginal.

 

Superannuation

This is probably the least popular option, even though it has one of the lowest tax rates, and offers excellent asset protection.

The main disincentives are the frequent legislative changes and the restricted access to super, which is less of an issue if you are close to retirement.

 

There truly is no one-size-fits-all and it is difficult the find the ‘perfect’ solution. Often you may need to use a number of different holding structures to get the best outcomes.

It is therefore important you always seek individual tax and financial advice.

Yves Schoof
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Yves Schoof

Author | Specialist Adviser for Medical Specialists and Surgeons at Affluence Private Wealth
I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.

As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.

My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.

Please contact me on yves@affluenceprivate.com.au or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on LinkedIn to receive new articles.

DISCLAIMER
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. 

The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs.
Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
Yves Schoof
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