capital gains tax

Dealing with a Capital Gain may not seem too difficult a problem, but reporting the capital gain for taxation and other regulatory purposes requires particular attention.

Realising a capital gain on the disposal of an asset can arise from transactions other than sales. Your taxation advisor will be able to confirm whether a transaction you have made with an asset MAY be taxable.

If you make a taxable capital gain during the year due to the sale of an asset did you know that the capital gain can be offset by either business losses or carried forward/ existing capital losses? You may also consider the use of following strategies help reduce your taxable gain for the year –

  • Rebalancing your investment portfolio, taking losses on underperforming assets (and reinvesting to others if cash flow permits). (Beware buying back into the same asset immediately – the ATO has issued a warning about this practice);
  • Making a concessional contribution/ roll-over in relevant circumstances, to an eligible superannuation account; and/ or
  • Investing some of the realised gains into a diversification of investment assets, including where appropriate, a (negatively-) geared portfolio.

A capital gain is realised when the sale proceeds received exceed the original ‘cost’: determination of the taxable portion of any gain is dependent upon a range of matters – about which you should consult your taxation advisor, but including –

  • Acquisition costs such as legal advice, stamp duties etc;
  • Holding costs where applicable (that have not been ‘expensed’ during the holding period); and
  • Additional capital expended on improvements/ enhancements (and again that have not been ‘expensed’ at the time incurred).

(Tip: To make the determination of any taxable capital gain more convenient to calculate, regardless of when it is realised, ensure that verifiable, detailed asset register records are maintained – and that the register is readily accessible.)

Investments made on an administration platform such as ASGARD and other providers make Capital Gains calculations as a matter of course in their Annual Tax Summary provided to investors.

Advisers at Continuum Financial Planners Pty Ltd typically use platforms for the majority of client investments in domestic listed company shares/ equities (directly held, or within a share fund – which also provides access to global equities), cash products (again directly, or through managed funds – and again allowing access to global as well as domestic assets), property (for which the domestic and global assets are only available under fund manager regimes) and a range of ‘alternative’ investment asset classes.

For advice on managing your taxable capital gains you should consult with one of our experienced advisers – and any investment strategy devised to minimise the taxation effect will have to be fully implemented within the same financial year as the gain that is realised! Contact Us through our website or by phone (07-34213456) to ensure your affairs are in order: ‘we listen, we understand; and we have solutions’ to your needs.

(This article was originally posted on our website in May 2008: it has occasionally been updated, most recently during January 2020.)