BigChrisB, can you expand on the tax implications for Superannuation? I though they were all taxed at 15% for income?
Is that why it would pay to have your high dividend shares exposure in there? Such as Australian shares?
Cheers
Ok, take this example. I have $1,000,000 in invested assets, $500k in Aus stock, $500k in international stock. I have two options to invest, in super at 15% and in my own name as my marginal tax rate. Lets take the 39% including medicare rate. Assume a gross yield (including the franking credits) for AUS stock at 7% and international stock at 2.5%
Scenario 1: Even asset allocation in each basket.
Personal income = 250000*.07+250000*.025 = $23500. Tax paid = $9262
Super income = 250000*.07+250000*.025 = $23500. Tax paid = $3525
Total tax paid = $12787, post tax = $34213
Scenario 2: International in super, domestic in personal.
Personal income = 500000*.07 = 35000. Tax paid = $13650
Super income = 500000*.025 = 12500. Tax paid = $1875.
Total tax paid = $15525, post tax = $31975
Scenario 3: International in personal, domestic in super
Personal income = $500000*.025 = $12500. Tax paid = $4875
Super income = $500000*.07 = $35000. Tax paid = $5250
Total tax paid = $10125, post tax = $37375.
i.e. on these assumed tax rates, sum invested and gross yields, you would be $5,400 a year better off having all international in personal accounts and all domestic in super, than having super 100% international.
My personal belief is that this maths is why the amount of international holdings in SMSFs is so low, as opposed to the financial industry's bleating about under exposure of SMSFs to international stock.