CGT and Super

[Cadbury]

G'Day,
I read somewhere about putting CGT amounts into your super. So, If I had a CGT bill for $50K, an option would be to put that amount straight into your super without actually giving it to the ATO. It sounds very unrealistic, but I'm sure someone out there can fill in the particulars for me.
Thanks.
Cadbury

 

[LynnH]

Yes, it is possible - but there are several conditions.

Firstly, you have to be eligible to contribute to super & claim a deduction - i.e. you have no employer making contributions for you.

Then you have to contribute an amount which will give you a deduction of $50K, which then offsets the $50K CGT and means that no extra tax is payable - there is a 'formula' for determining the amount of the deduction, but I cannot remember it (too late in the day!).

One of our wonderful knowledgeable accountants will be able to explain it with much more accuracy and clarity!

Cheers
LynnH

 

[NorwegianBlue]

You can do it even if you have an employer, by salary sacrificing into your super. My Dad is wiping out a considerable CGT "event" this year by salary sacrificing all his salary to super - he's 64 so the limits are high.

Don't know all the details, but a decent accountant will know.

 

[austini]

Hi,

From what I understand, if you are self-employed or no employer is paying super contributions on your behalf (eg full time investor) then you can contribute a deductible amount of $50,000 ($100,000 if over 50 until June 30 2012) to Super. However you will pay the super contribution tax at 15% in the Super fund. This is certainly better than paying CGT at 30/40/45% outside of Super.

And as mentioned above Salary Sacrifice is an option.

This booklet may help:

www.westpac.com.au/superstrategies.

Cheers - Gordon

 

[yo yo ma]

Maybe this is what you have read about?

There are exemptions and rollovers that may allow you to reduce, defer or disregard your capital gain or capital loss.

There is no rollover or exemption for a capital gain you make when you sell an asset and put the proceeds into a superannuation fund, use the process to purchase an identical or similar asset, or you transfer an asset into a superannuation fund. For example, if you sell a rental property and put the proceeds into a superannuation fund, or use the proceeds to purchase another rental property, a rollover is not available. However, an asset, or the capital proceeds from the sale of an asset, may be transferred into a superannuation fund in order to satisfy certain conditions under the small business retirement exemption.

http://www.ato.gov.au/content/downloads/NAT4151_07.pdf

 

[Cadbury]

thanks everybody, that has been exactly what I was after.

 

[LynnH]

Cadbury

Just one point - salary sacrifice is considered to be an employer contribution to your super. It does not entitle you to a tax deduction in these circumstances. If you are considering going down this path, I urge you to see an accountant before you commit yourself.

Cheers
LynnH

 

[marg4000]

We are doing the salary sacrifice thingy to reduce capital gains tax this year.

Lynn, we won't be claiming a deduction, simply reducing our income as low as possible before the capital gain is added on.
Marg

 

[LynnH]

Marg

As you said, you're reducing your income (by salary sacrificing into super) in order to pay a lesser amount of tax on your CG. (You'd be mad not to! )

I was just trying to distinguish between what you're doing (with the amount sacrificed being a deduction for the employer, not the employee, and the contribution being subject to a 15% tax going into super) - and the situation where a person does not have an employer making super contributions for him and who is eligible to claim a deduction for super contributions he makes on his own behalf.

Think I'll leave it there - now I'm starting to confuse myself!

Cheers
LynnH