Ripper Wealth

Foundations

Before you invest, get your house in order. Set goals, track cash flow, and build emergency reserves.

What To Own

Understanding asset classes and their roles in a balanced portfolio.

Why It Works

Historical context, wealth cycles, and the economic principles that drive markets.

AI-Powered Education

Cycle-aware tools backed by institutional-grade research

How To Execute

Profile-specific strategies. Content varies based on your persona (PAYG, Business Owner, Property/Crypto/Stock Investor, etc.).

When To Adjust

Timing and signals. Know when to buy, sell, or hold based on market cycles.

More

Learn about us, get help, share feedback.

TAX STRUCTURES 101 • STEP 2 OF 4

See It: Real-World Examples

Tell me and I forget. Teach me and I remember. Involve me and I learn.

Benjamin Franklin

Your Learning Journey

GET READY

SEE IT

TRY IT

CHECK IT

This Step Takes: 20 minutes

Two stories, one principle: structure determines how much wealth you keep over a lifetime.

Why Stories Work

Two investors. One business owner. Same money. Very different outcomes.

Stuck on a term? CGT discount, SMSF pension phase, discretionary trust — find plain-English definitions in our Tax & Investing Glossary.

See the glossary →

Same Money, Different Outcomes

Two investors. Same $100,000 starting capital. Same 8% annual returns. Different structures. Dramatically different outcomes.

Sarah, 35

Personal Post-Tax Investing

• Invests $100,000 of after-tax money in her own name

• Pays 40% tax on investment income each year

• Pays 20% CGT when rebalancing (50% discount applied)

• Simple setup — but high ongoing tax drag

Michael, 35

SMSF Structure

• Invests $100,000 via a Self-Managed Super Fund

• Pays only 15% tax on investment income

• Pays only 10% CGT when rebalancing

• More setup — but dramatically lower tax drag

Let's follow their 25-year journey...

The 25-Year Journey

Years 1–5: The Tax Bite Begins

Sarah's Experience

Annual investment return:$8,000
Tax on income (40%):−$3,200
Reinvested:$4,800
CGT when rebalancing (20%):−$800
Portfolio after 5 years:$132,000

Michael's Experience

Annual investment return:$8,000
Tax on income (15%):−$1,200
Reinvested:$6,800
CGT when rebalancing (10%):−$400
Portfolio after 5 years:$145,000
Sarah (personal)$132,000
Michael (SMSF)$145,000

Just a $13,000 gap after 5 years. This is about to compound dramatically.

Year 10: The Crossover Point

Sarah's Portfolio

$216,000

Michael's Portfolio

$293,000

Wealth Gap at Year 10

$77,000

Michael has 35% more wealth from structure alone

The Rebalancing Test

Both decide to rebalance — selling some shares to buy bonds. This triggers a CGT event.

Sarah's CGT Bill
Capital gain:$30,000
CGT discount (50% — personal):$15,000
Tax at 40%:$12,000
Michael's CGT Bill
Capital gain:$30,000
CGT discount (33% — SMSF):$10,000
Tax at 15%:$3,000

$9,000 Saved Every Time They Rebalance

Over 25 years, with 5-10 rebalancing events, Michael saves $45,000–$90,000 in CGT alone — before counting the ongoing income tax savings each year.

Year 25: The Final Tally

Same starting capital. Same returns. Different structures.

Sarah (Personal)

$265,000

Michael (SMSF)

$480,000

Michael's Advantage

$215,000 more

That's 81% more wealth from structure choice alone.

Where Did Sarah's Money Go?

Lost to income tax over 25 years:$95,000
Lost to CGT on rebalancing:$125,000
Total tax cost:$220,000

Michael's Advantage

He invested the same $100,000, took the same investment risk, and earned the same 8% returns. The only difference? He structured smarter. By using an SMSF, Michael kept more of his returns compounding year after year.

But Wait... The Pension Phase Game Changer

At Age 60, Michael Switches to Pension Phase

This is a legal structure change inside his SMSF that completely transforms his tax situation:

0%

Tax on income

0%

Tax on capital gains

0%

Tax on withdrawals (60+)

His $480,000 at age 60 now grows completely tax-free. He can still trade, rebalance, and adjust his portfolio as much as he likes — every dollar of income and every capital gain compounds without any tax drag at all.

Sarah at 80 (Personal)

$580k

Michael at 80 (SMSF Pension)

$2.2M

Lifetime Structure Difference

$1.6 MILLION

Same starting capital. Same returns. Same risk. Just different structure decisions.

Pension Phase Rules (2024-25)

To access pension phase, you must be 60+ and meet a “condition of release” (retirement, reaching preservation age, etc.). There are minimum annual withdrawal requirements (4-14% based on age) and a $1.9M transfer balance cap (indexed). Consult a financial adviser to confirm your eligibility and timing. For most long-term investors, pension phase is the most tax-efficient structure available in Australia.

A BUSINESS OWNER'S VIEW

Dave's Story: Choose the Outcome

Sarah and Michael are investors. Dave is a business owner. Make decisions for Dave and watch how his wealth and tax bills evolve over 10 years based on your choices.

Story ProgressYear 2020
👨‍🔧

2020

Meet Tom, an IT consultant earning $80k/year as a sole trader. He's ready to grow his business.

Tom gets an offer for a big corporate contract worth $200k/year. How should he structure?

Key Insights From Both Stories

Timing Is Critical

Dave lost $300k by staying a sole trader too long. The right time to incorporate? As soon as your income exceeds $100k/year consistently.

Pension Phase Is the Ultimate Tax Structure

Sarah ends up with $580k. Michael ends up with $2.2M. The difference isn't just 15% vs 40% tax — it's the pension phase 0% tax that compounds Michael's advantage over 45 years.

Structure Choices Compound Over Decades

The gap between structures doesn't grow linearly — it accelerates. $13k difference at year 5, $77k at year 10, $215k at year 25, then $1.6M lifetime. Start early.

One Size Never Fits All

Michael's SMSF is ideal for retirement savings. Dave's Trust + Company works for business income. Your optimal structure depends on your income type, goals, and timeline.

Your Options: All 7 Structures Compared

Now you understand why Michael chose an SMSF. Here are all seven Australian investment structures compared side-by-side.

Structure
Control
Tax on Contributions
Tax on Income
Effective CGT
Liability Protection
After-Tax Return
Personal (Post-Tax)High35–40% (already paid)35–40%17.5–20%Low~4.8%
Industry / Retail SuperMedium15%15%10%High~6.8%
SMSF (Accumulation)Very High15%15%10%Very High~6.8%
SMSF (Pension Phase)
Very HighN/A0%0%Very High~8.0%
Family / Discretionary TrustHighPost-taxDistributed to beneficiaries17.5–20%Moderate~5.5–6.5%
Company (Pty Ltd)Very HighPost-tax25–30% flatNo discountVery High~5.6–6.0%
Unit TrustMediumPost-taxDistributed to unit holders17.5–20%Moderate~5.5–6.5%

* Assumes 8% gross annual returns. After-tax returns calculated based on typical marginal rates.

SMSF Pension Phase offers the highest after-tax returns (available from age 60).

📚 Data Sources:

ATO — Capital Gains Tax Discount|ATO — Super Tax Rates (Accumulation)|ATO — SMSF Pension Phase Rules|ATO — Transfer Balance Cap 2024-25

  • Sarah ends up with $265k. Michael ends up with $480k at year 25 — and $2.2M at 80. Same money, different structures.
  • SMSF pension phase is 0% tax on income, gains, and withdrawals. It's the most tax-efficient structure in Australia.
  • The gap between structures accelerates: $13k at year 5, $77k at year 10, $215k at year 25, then $1.6M over a lifetime.

Homework

Reflect

Which investor's situation most resembles yours: Sarah (personal), Michael (SMSF), or Dave (business owner)? What structure change could benefit you most?

Action

Identify your current investment structure. For each investment you own, write down: what structure is it held in, what tax rate applies, and what would change if you moved to an SMSF or trust.

What's Next?

20 minutes

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