Have you had a Capital Gains Tax (CGT) event during the year?
Managing Capital Gains Tax events so as to minimise the actual CGT payable will optimise the benefit you receive from the ‘transaction’.
If you have made a capital gain during the year due to the ‘sale’ of an eligible asset, you may be able to offset some of the taxable capital gain with either business losses or capital losses brought forward from prior periods.
Whilst your financial planner can help you to identify the events that could give rise to a CGT liability, you should seek the advice of your tax adviser (accountant or lawyer) to confirm that any ‘transactions’ that could give rise to a Capital Gains Tax liability are brought to account. You may find that even transfers of property (as defined in the relevant legislation and regulations) without financial compensation can be caught under this tax impost.
(Tip: Always ensure that verifiable detailed asset register records are maintained so that the taxable capital gain can be accurately determined – whichever year it is ultimately realised.)
Investment Strategies that can minimise the impact of CGT
You may also consider the use of following strategies help reduce your taxable gain for the year –
- Rebalance your investment portfolio: take the opportunity to change the asset allocation in your portfolio, focusing in particular on potential losses on underperforming assets. (You could reinvest into better performing assets if cash flow permits: but beware buying back into the same asset immediately – the ATO has issued a warning about this practice as a tax management strategy);
- Invest some of the realised gains into a geared, diversified investment asset portfolio; and/ or
- Make concessional contributions to eligible superannuation accounts.
Getting advice on managing Capital Gains Tax event liabilities
The experienced team of advisers at Continuum Financial Planners Pty Ltd can assist you to implement the strategies needed to minimise the Capital Gains Tax liability: – ‘we listen, we understand; and we have solutions’ to your financial management dilemmas, that we deliver in personalised, professional wealth management advice.
(This article was originally posted to an eNewsletter in June 2012: it has been updated and refreshed as at April 2021)