CGT Question

Discussion in 'Accounting & Tax' started by devman, 5th Sep, 2017.

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  1. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Really. Sell property and tax WILL result. Tax avoidance will result in penalties. I dont even understand why that isnt obvious.
     
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  2. L3ha7

    L3ha7 Well-Known Member

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    This family can't catch a break-they managed to reduce that $90K notice of CG tax to $33K but now centerlink has sent them a letter and asking them to pay $13K back to centerlink due to high income.

    Why centerlink is taking into account the total capital gain instead of the leftover money after paying cg tax etc?

    (According to them centerlink see that capital gain as an income and eventhough property was under husband's name -they are looking it as a joint income for the house hold)

    After looking at them what they are going through (various tax,fees and charges) once they sold the property-I wonder if it is worth having IP's!!!
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    @Paul@PFI sums it up beautifully.

    The question remains, if the aim of investing to to generate a profit, did they also consider that some day they may also need to pay tax either along the way (if CF +) or when the asset was sold.

    Centrelink is our middle class welfare system, it is a safety net which was used by your friends when they needed it. If they're adjusted income exceeded the eligibility rules, it's only just that they are required to make a repayment of the excess.
     
  4. L3ha7

    L3ha7 Well-Known Member

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    Thanks @Scott No Mates - I don't think they had any plans to sell but dye to other commitments with family business they took that step.

    In reality, it shiws how imp. planning is when it comes to do these things.

    After reading various threads (lics, etf, investment property) on PC, even me and wife are considering to sell 1 IP to avoid too much cg tax as she is not working at the moment and that IP is under her name.

    It comes down to ongoing fees/charges to maintaining ip vs getting divis from Lics.

    We are thinking to speak to financial advisor but their fees is kinda scary (too much). Hence seeking some endorsement from otger people who have used aomeone and can validate as a good value (fees vs the advise they have received).
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Non compliant taxpayers tend to have these issue rather than all property owners. All property owners should know that selling a property means taxes have to be determined - Ignoring it is not a plan B. That sale may affect incomes, Affects tax due and benefits. And things like HELP debts, private heath, medicare and so on. So repayment of any overpayment is required.

    I always advise clients to do two calcs BEFORE selling property
    1. What would the CGT gain / loss be
    2. How much $$$ cash after tax (1. above) results.
    I always ask about centrelink, private health etc and there are no surprises.

    Poor planning and lack of advice IMO.

    Cant catch a break ?? By selling at a profit and ignoring the tax. Lucky Centrelink or ATO didnt argue it was evasion and take the matter on as a crime in the courts.
     
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  6. L3ha7

    L3ha7 Well-Known Member

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    Hi @Paul@PFI - my understandng is that they didn't ignore or avoid any tax etc. , they just didn't do full calculations and lack of knowledge, proper guidance leads to this.

    I agree with you Planning is a key factor.
     
  7. Kassy

    Kassy Well-Known Member

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    At least with Centrelink they should be able to do a payment plan if they need to. Centrelink use ‘adjusted taxable income’ which seems to include some deductions in your tax and others are grossed back up. DHS do have a web page which explains it and @Paul@PFI has the best point, an accountant would have been able to clue them in very easily...
     
  8. Trainee

    Trainee Well-Known Member

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    Ignorance is not an excuse. Not willing to pay for proper guidance also is not an excuse.
     
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  9. Trainee

    Trainee Well-Known Member

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    The ato and centrelink are applying their rules, that have been around for some time. Again, they should have known all of this. Or should have asked a tax advisor.
     
  10. L3ha7

    L3ha7 Well-Known Member

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    Agreed with above all and have told them for their future plans they should speak to qualified professional when it comes to things like this.
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Not their rules but the law.