New member with CGT ?

[CHISEL]

Good Evening every one. Just joined Great site and forum everyone :D

My thread is I'm looking for ways to Offset Capital Gain Tax due soon.

What Ive heard so far:
1) a friend said there some scheme to buy trees whereby you get an
immediate credit against CGT owed.

2) another idea is buy another property before this june financed with a fixed interest loan paying interest for one year before june 30

The tree idea doesnt turn me on, but doing some smart thing to offset a tax bill I like it can any body help. eg pros and cons

[Aceyducey]

Chisel,

Ask Geoffw for his experiences with trees....

You'll run a mile!

Cheers,

Aceyducey

[geoffw]

Ask Geoffw for his experiences with trees....
Sorry to be late in on this one.

I went into several agricultural "tax effective investments" in the late 90s.

I was sold on these because they apparently ended up costing me almost nothing- if they succeeded I could make some good money, but if they failed, I would lose only a little.

ATO stepped in, disallowed deductions that I'd claimed. I had to pay $53K on one year's claims only- and faced similar paybacks on investments for two subsequent years.

There was a settlement- so I only had to pay them another $6K.

Now there is a system in place where ATO issues certification to ensure that they will allow deductions for an approved project.

But, for me, these schemes are still only being sold on tax deductions- with rather optimisitic views of profits (the schemes I "invested" in went bust, or were sold off cheaply).

I'm disturbed to have recently seen such a scheme promoted on the same premises- that if it "loses", you will lose nothing (and this promoted by someone whose financial advice I very much respect). That's the very point ATO picked on to disallow deductions (or, at minimim, to disallow deductions in loan interest).

Now I'm facing a CGT bill in the next financial year, and I have the same problem. What am I going to do about it?

Well, short of rearranging some deductions to occur in the year of CGT liability, not much. I'll bite the bullet and pay the tax.

I know some people who have loked at the same- and they've decided that they will not go into a situation where they end up paying 25% of their profit to the government (they've held the asset for more than 12 months, and they're in the top tax bracket)- so they choose not to invest.

But they continue to work at their day job- paying more than that out of every single pay packet.

So I sold a property, and made $60K profit. ATO will get $15K (depending on cost base calculations)- but I've still made $45K. If I'd worked massive overtime all year, and earnt $60K, I would be paying $30K. So I'm not too unhappy at paying $15K.

If you do choose to try to offset capital gains against losses, please be very careful.