CGT as assessable income

Hi All
This might be a simple question, according to ATO CGT is treated as a part of the assessable income, so if I want to sell a property which has gained significantly (400k+) there is no advantage of waiting till my personal income goes down (i.e retired) since anyway I will have to pay tax at the full marginal tax rate even with the 50% CGT discount,
Is this assumption right or did I miss anything here

 

There will be a slight advantage - unless you income is so huge that your retirement income will be taxed at 47%.

CGT is not taxed at the marginal rate, but it is added to your other income. So if your income was $0 the first $20k will be tax free etc.

www.taxcalc.com.au - try this and put in different incomes and see the effects.

 

Yes net capital gains are taxed at marginal tax rates.

Only difference will be when retired you will have less other assessable income so it might put you into the 32% brackets vs the 45% bracket.

 

I believe it is taxed at your marginal tax rate. The marginal tax rate on 20k is zero.

But yes talking semantics

 

Lo. True,

but some people assume if they are on a 37% marginal tax rate that the whole gain would be tax at this rate - but it could be taxed higher as the income thresholds are exceeded.

 

There could be some minor strategies to address reducing tax.

1. Partial transfer / sale to a entity if possible
2. Tax reduction strategies eg super contributions up to concessional cap
3. Earning strategies eg Downsizer reduction strategy to super for one or both spouses
4. Timing stratgies

I would start with a diligent estimate of total assessable gain so each option can be measured.

Things to watch include high income earner levies eg Div 293, Medicare Levy Surcharge, loss of the Private health offset etc. These can impact total tax

 

Hi Mike/Terry/Paul

Thanks heaps for all the information. I guess we might have to think of a strategy to reduce the taxable income during the sale year.