Superannuation Discussion + market volatility

[MARTINE]

give what away?

BOMAD

 

[Happy Dude]

Wouldn't the marginal tax rate be affected by the CGT gain prior to any CGT discount? It only takes $190K to hit the top marginal rate.

Yes but selling in a no-income year would mean that the income tax is lower due to tax free/lower tax brackets. I thought this is why it is spouted as a strategy. I need to get advice regarding putting any proceeds into super prior to paying income tax and income splitting too.

 

[Mr_Tee]

Yes but selling in a no-income year would mean that the income tax is lower due to tax free/lower tax brackets. I thought this is why it is spouted as a strategy. I need to get advice regarding putting any proceeds into super prior to paying income tax and income splitting too.

There will be a new minimum 30% tax rate on capital gains irrespective of the levels of other income during the tax year which effectively eliminates the "sell in a low/no income year". So whatever you plan to do you will, at least, pay 30% on the capital gain.

 

[Quickstatus]

Yes but selling in a no-income year would mean that the income tax is lower due to tax free/lower tax brackets

The portion under $190K will be taxed at about $51K

51/190 =27% averaged

So the bit under $190K will have a tax rate of 27% and the bit above $190K will have a tax rate of 45%. (Then apply the Medicare levy, CGT discount whatever it is.)

If all the $190K was at 45%, you are basically only saving 18% x 190 = $34K (not including CGT discount) by selling it in a zero personal and other income year.

Generally you want to sell when the market is good for selling, not necessarily waiting for low income year - the market could dip in that year

Using current legislation

 

[Brissy1]

An in-specie transfer of an asset from personal names into a SMSF will not eliminate/reduce any CGT implication for the transferor

No. To be clear, the purpose of the transfer would be so future cg, after the transfer, are taxed at 10%

 

[Quickstatus]

would be so future cg, after the transfer, are taxed at 10%

But the in specie transfer would incur CGt at the normal rate for that transaction?