You bought an investment.
A property for example.
Bought it for $200,000, sold it for $300,000.
You made $100,000 profit - wooohoo.
The tax man wants a piece of your pie - booo.
It’s called Capital Gains Tax.
So here’s 2 strategies around TIMING to minimise Tax on your Capital Gain.
47% x $100,000 = $47,000 tax.
Or only $53,000 profit left. :(
You only get taxed on half the profits.
That’s 50% of $100,000 tax free (woohoo!) and
47% x $50,000 = $23,500 tax.
So you’ve had a great year aka your income is high.
Any profits you make on the sale of an asset will go straight onto your (already high) taxable income.
So this TIMING strategy also relates to timing the sale with a year in which your income will be lower.
You know that round the world sailing trip you wanted to take the family on?
You know that crappy year where nothing really went well in business?
What do you need to implement this strategy?
Yes, it certainly does.
Yep - same treatment as well!
Nice try - but no.
You cannot avoid capital gains tax.
If you hold assets in a trust, this strategy still applies.
Hold for over 12 months, and sell in a low income year!
For every dollar in tax we save a small business, we give a family in need a days worth of access to life changing help. Here are some of the impacts -