For some time, there has been compelling evidence that astute tax management of Australian equities can meaningfully boost returns for superannuation fund members. In some circumstances, gains of up to 50 basis points each year have been attributed to these efforts. The challenge facing investors now is to determine which after-tax strategies will best meet their needs. Last month, Investment Magazine and Parametric convened two roundtables with after-tax leaders to focus on how the barriers to implementing these strategies can be overcome. SIMON MUMME reports.
For Australian equities managers, three primary drivers of after-tax investment returns are available and should not be ignored: participating in off-market share buy-backs, preserving franking credits and, where possible, holding stocks for more than one year to incur a lower rate of capital gains tax (CGT) upon sale.