Investing in Australian equities via a superannuation vehicle rather than directly returned an additional 2.4 per cent compared to high marginal tax rate investors over 10 years, according to the latest Russell Investments/ASX long-term investing report.
Russell said the difference in after-tax returns between types of investors in the same asset class highlighted opportunities in choosing the right investment structure.
Investing via superannuation would become even more attractive in the future due to the 0.5 per cent Medicare increase and the potential for higher personal tax rates, it said.
Australian shares retuned 8.9 per cent per annum gross, 9.2 per cent on an after-tax basis for the lowest marginal tax rate and 6.9 per cent for the highest marginal tax bracket. The asset class performed best in superannuation at 9.3 per cent due to the 15 per cent tax charged on super assets.
While asset performance was largely on par for investment through superannuation and investors with the lowest tax rate for other asset classes, the difference was stark for higher income earners.
Residential property returned 1.2 per cent more in super, Australian residential property 1.2 per cent, Australian listed property, 0.7 per cent and Australian fixed interest 2.0 per cent.
Super also won out on global assets, returning an extra 2.6 per cent on global fixed interest, 1.2 per cent on cash, 1.5 per cent for hedged global shares and 0.5 on per cent unhedged terms. Unhedged global listed property returned 1.4 per cent more invested via superannuation.
BlackRock boss Larry Fink praised Australia’s superannuation system in his annual chairman’s letter.
The prudential regulator has announced it will publish new expenditure data of superannuation funds, providing details on expenses like advice, director remuneration, and payments to unions.
Affirming the UK’s growing attractiveness as an investment destination, a number of Australia’s largest investors recently joined the UK Foreign Secretary for an exclusive briefing in Canberra to discuss further opportunities for trade and growth.
The specialist superannuation law advisory practice is set to wind up, with managing partner Jonathan Steffanoni planning to bring a new offering to market.
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