Clarification on CGT

Hi All
can anyone help with this.

I sold a couple of properties last year and my accountant advised that if I continue to trade properties the ATO will flag this and it will be seen as business and ATO will not allow 50% discount.

Am sure this has been discussed somewhere on SS but can someone clarify how this works and my options.

Cheers, MTR
 
.... my accountant advised that if I continue to trade properties the ATO will flag this and it will be seen as business and ATO will not allow 50% discount.

Your accountant is right, the ATO may class you as a property trader.

So under your previous arrangement your options were to buy, reno, hold for 12 months min & sell presumably? And you paid CGT at your marginal tax rate on profit - less the 50% discount.

Under the 'new' scenario the properties become trading stock. You buy, you value add, you sell, you pay tax on the profits at your marginal tax rate. I suppose you could do the trading in a Pty Ltd company and then you only pay company tax rates?

Ask your accountant. There may be other alternatives available to you.
 
you also need to register and charge for GST (if renovating or developing).

often you are better off doing buy'n'die than trading - traders need to turnover a lot morew than BnD to achieve the same after tax result
 
Hi Aus
Tax is a killer.

With the current development I can see a profit of around $180K-200K, I think it is worth giving it a shot. Met up with the accountant and could look at reducing tax to 30% overall, she also mentioned if need be use SMSF as another option.

Cheers, MTR
 
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