cgt calc, is this right?

[TMNT]

Assume I've owned the property for less then a year, and it's an ip

Sell price minus buy price, minus stamp duty, legals, renovation costs, selling costs

Let's assume my salary 50k
Assume profit from flip is 50k
Assume 10k neg geared

So would my cgt be calculated on 90k or 100k tax bracket

Are there any other ways to resuce cgt other then to hold it longer

Was thinking about dep schedule but seems a bit pointless of a waste paying 500 since I M selling it

 

[mumbai]

sell it for cheap!
Less profit .. Less CGT

 

[TMNT]

sell it for cheap!
Less profit .. Less CGT

that made me laugh

 

[CHAOS]

Hi TMNT
I have a similarly related question.

Is the CG added to your income before or after 50% discount?

Eg income 50k

Gain 50K (after expenses)

Does that make your tax income 100k or 75 if discount is applied?

 

[alexlee]

Hi TMNT
I have a similarly related question.

Is the CG added to your income before or after 50% discount?

Eg income 50k

Gain 50K (after expenses)

Does that make your tax income 100k or 75 if discount is applied?

In this case, your taxable income is 75k if eligible for the 50% discount.

 

[CHAOS]

Thanks

 

[Paul@PFI]

The total cap gain AFTER reduction by losses in the same year (or c/fwd) is then halved if you are eligible. Then that value added to taxable income. It means you pay medicare levy, surcharge etc on this income too.

There can be benefits of a depn schedule prior to sale. It will give a personal deduction of say $5,000 at your marginal tax rate. Then the CGT profit increases by $5,000 but its subject to 50% discount. (??) ie $2,500 taxable. You would be better off by a $2,500 deduction ie $1,200 refund v's $500 cost for schedule.

You will be better off by 50% of the deduction claim at your marginal tax rate in theory.

If the discount isnt eleigible for the 50% discount its a zero sum issue.

I would chat to BMT or Depreciator and assess the merits of that single year deduction then decide.

Also run the CGT numbers. If its a CGT loss its of no value.

 

[speary]

If you are selling a flip, it might not be a transaction on capital account and therefore CGT rules may not apply. This transaction could fall under 'profit making intention' and be taxed as ordinary income.

 

[Ed Barton]

The total cap gain AFTER reduction by losses in the same year (or c/fwd) is then halved if you are eligible. Then that value added to taxable income. It means you pay medicare levy, surcharge etc on this income too.

Out of interest...

What if you have more than one gain event and some are eligible for the 50% discount and some aren't?

 

[Paul@PFI]

Ed, That happens too. Its common.

Software will do it for you (etax included) BUT it is very confusing in etax. Paper returns must have this form attached (This is 2013) if total gains are $10K or more. It explains the methodology and works from the top down.

https://www.ato.gov.au/uploadedFiles/Content/TPALS/downloads/TP00350063NAT34232013.pdf

The taxpayer can choose...Obviously you would offset losses against non-discounted gains first. The value of discounted capital gains can never be more than the total net capital gains OR the net discounted value.
For example if you had $100K of discount and $30K of non-discount then $130K is reduced by say $25K C/Fwd losses. So $105K is the total net gain. Of that $105K...$5k non-discount and $100K discount. So the taxable value would be $55k. ($100k div by 2 + $5k)

This is a area where tapayers can get it wrong and the ATO can still impose penalties for recklessness. Even for a honest misunderstanding or mistake. Often a mistake like this gets detected and ATO will amend the return lodged and you will get an assessmnet for a different value to what was estaimted. But not always.

I always say - Under and over paying tax are equally as bad.

 

[TMNT]

Out of interest, wouldnt it be better\?

assume CG Is $20k

if say you got your brother/father/son/friend to help you renovate for 3 months, assume $40 per hour, which is $19200, lets say $20k for arguments sake, but was doing you a favour

wouldnt it be beneficial to pay him the $20k, he provides invoice, now your CG becomes zero, instead of paying the marginal tax rate on the $20k CG of 36% tax bracket for example,
assuming the relative is on a lower tax bracket, or better still if he was unemployed, then hed be on tax free for the first $9 or $12k, then 16% or whatever the next bracket is

 

[Paul@PFI]

Out of interest, wouldnt it be better\?

assume CG Is $20k

if say you got your brother/father/son/friend to help you renovate for 3 months, assume $40 per hour, which is $19200, lets say $20k for arguments sake, but was doing you a favour

wouldnt it be beneficial to pay him the $20k, he provides invoice, now your CG becomes zero, instead of paying the marginal tax rate on the $20k CG of 36% tax bracket for example,
assuming the relative is on a lower tax bracket, or better still if he was unemployed, then hed be on tax free for the first $9 or $12k, then 16% or whatever the next bracket is

Thats what we in tax call a scheme.
- Is your enterprise a business. ? If not it may not be deductible.
- PAYG withholing
- SGC
- Workers Comp
- Centrelink FRAUD ?

 

[bumskins]

Assume I've owned the property for less then a year, and it's an ip

Sell price minus buy price, minus stamp duty, legals, renovation costs, selling costs

You only get a CGT discount if you hold > 12 Months.

 

[bobby85]

TMNT, are you selling because it's currently 10k Neg geared?

 

[TMNT]

Thats what we in tax call a scheme.
- Is your enterprise a business. ? If not it may not be deductible.
- PAYG withholing
- SGC
- Workers Comp
- Centrelink FRAUD ?

Obviously not looking to do anything illegal

However if it's going to be a tax benefit for all of us then I'll do it

Im pretty sure you don't need to be an enterprise to hire people, obviously I'll issue an invoice under my abn for the house he has done and Transfer it to his account


And no centrelink isn't involved here

 

[TMNT]

TMNT, are you selling because it's currently 10k Neg geared?

No, the property I'd about 2k neg geared which is why I'm selling, the 10k was just an example

And yes obviously less then 12 months holding is no cgt discount