Strategies to reduce CGT

Just throwing it out there.

I appreciate some helpful tips you have used

 

Paying substantially over the market is one, the more that you overpay the less likely you are to make a dollar.

 

A bad memory sometimes works lol

 

Put some of the gain into carry forward concessional super contributions if available.

Need to have super balance of less than 500k and not have used up the cap since 2019.

 

Tax Tip 119: How to Reduce CGT on Investment Property (Part I) Tax Tip 119: How to Reduce CGT on Investment Property (Part I)

Tax Tip 209: How to Save CGT on Investment Property Part II – Planning ahead Tax Tip 209: How to Save CGT on Investment Property Part II – Planning ahead

 

This is my plan. I had a few years part time, so plenty of roll-forward concessional contributions to use up. Keeping in mind the roll-forward contributions can only be used for up to 5 years

 

Keeping in mind the roll-forward contributions can only be used for up to 5 years.....Incorrect. In the 2022 year you can utilise the remaining 2022 year cap...plus the catch up for the 2019, 2020 and 2021 years. 2019 will always be the earliest available year.
Take care with determining the unused cap as its far from straight forward and ATO 2022 year data is not always correct and doesnt consider what a employer could contribute in the next few weeks. The 2019-2021 should be for some taxpayers.

My first suggestions for current year gains include:

1. determine what the taxable gain really is. Many get it wrong and it can affect other calcs. Also allow for ETFs which may distribute after 30 June that includes CGT amounts in the income
2. Consider not realising a gain (?)
3. Consider selling other assets fro a offsetting CGT loss. Do you know how that works ? Many get it wrong. Strat with three numbers. Gains at discount, Gains not discounted and losses. Deduct losses from NON-DISCOUNT first. Then apply to discount gains. Then halve the "net" discount gain that is left.
4. Consider deductions such as super BUT...Watch Div 293 tax, excess contributions and watch issues like negative income or a contribution that is too much for the marginal tax rate.
5. Ensure the contribution is RECEIVED by the fund before 30 June.

 

I did say "up to 5 years", which is correct as per:
"The amount of unused cap amounts you can carry forward will depend on the amount you have contributed in previous years, starting from 2018–19. You can use caps from up to 5 previous financial years, including when you were not a member of a super fund."

Super contributions - too much can mean extra tax

The remaining cap in the current year is not a roll-forward

 

2018/19
2019/20
2020/21
2021/22

Maths is hard.

 

not sure if you are criticising my logic, but my comment stands - when planning into the future, keep in mid you can only use the previous 5 years. The fact that there has not yet been 5 years of this policy does not change that observation.

 

At present you can only take advantage of the previous 3 + the current year (unless you are able to bring forward next year's contributions).

 

ATO website ahows the balance excluding the current years cap.

My question is around the following:-

Do you mean that
If sold IP with CGT component then adding $ into super will apply 15% tax compared to the higher tax as income be lowered ?

 

In the 2022 year its impossible to consider 5 years. I stand by my view that the maximum is not based on years. It is based on a dollar value. Limited by time.

 

Pay millions for a worthless NFT, sell it later for a a few dollars. Outome achieved.

 

yes - reduce taxable income by contributing to super (which, as you say, is still taxed, but significantly lower.

 

Sure, you are also not wrong, but my statement is referring to the ATO policy, and something to keep in mind for future planning. Very specifically in my instance, if I am looking to sell a couple of properties next year or two that will realise a significant capital gain, I am better off not utilising the carry forward values at the moment. However, I should make sure I use my carry forward contributions before they expire.

 

ATO just enforce tax law, not policy. Agree timing is everything. However also consider Div 293 tax. The more contributions you accumulate the worse it may be. Div 293 occurs when assessabvle income PLUS concessional contribs exceeds $250K. This may erode the tax benefit for contributions to 17% (47% less 30% = 17% saved).

Also consider downsizer as after 1 July the age test is far less. If the property is eligible etc

 

Sorry to hijack.

Am I correct to assume that a CGT event will impact things like child care subsidy (for after school care in my case) by the amount liable for CGT (rather than the full investment gain).

 

Possibly. Income tests imposed by centrelink must be considered. You can produce a legal robodebt

 

I was due to retire in Dec (end of teaching year). I had months of Long Service Leave which would have been paid out that financial year.
I was only working 3 days a week so salary sacrificed $35k- the max) from July to Dec. I then took Leave Without Pay for 6 months. So my wage was only about $20k that year. My hubby was already retired. I sold a property that year. Then I retired (our cashflow was pretty low) and got my LSL, Sold another 2 properties. This increased our cashflow.