tax and super?

[dzcook]

first can anyone tell me what or how they work out capital gains tax on propertys im in gods country qld if that makes a difference in replys ? ie different states different rules ?

and the second ? is what happens to the standard work super when u stop work early ie say im 50 and stop work to open my own business ? what happens to the extra money that i have paid into my employers work super ? can i roll that over into another self funded super and then what happens to the money that my boss has paid in? dose it just sit there till i turn 65 ?

hope the questions make sense they do to me but i know what i mean
thks for any info

[DavidG]

Cappital gains ?????????
Super - You can leave it or roll it all (yours and employer paid bits) into another fund.
Depends which will give you the best return.
See an investment consultant first.

When you open your business you (as the employer) pay a percentage to (as an employee) your superfund in pre tax dollars.

[johnc]

Dz,

It might be worth your while to see an accountant and get a bit more out of the advice.

If you have stated your age correctly you can access your super at age 55 providing you are retired. Otherwise go for 65 but there are exceptions, and tax changes at age 60 if it is a pension you are taking.

Generally you can rollover into a self managed fund, but beware of fees in leaving some funds, and some govt funds do not release money.

If you have lived in a property the entire time you owned it there is no capital gains tax. If it was a rental you pay tax on half the gain if you owned it more than twelve months. The applicable dates are when you signed contracts not settlement. You can reduce the sale price for agents fees legals etc. Purchase you add on stampduty legals etc. This is very general it is not adequate to base any decision on and there are a number of possible variables I have not touched on. Also this is a woodwork forum not a tax forum so don't get excited if you had been expecting more.

John

[snowyskiesau]

Check out the ATO website (www.ato.gov.au) for answers to both questions.
If you're looking to open your own business then you'll be consulting an accountant so you should ask them about super and CGT.

You can nominate your own super fund and can roll over any existing funds into the one account.
As to when you can access this money, depends on when you were born.

[jmk89]

first can anyone tell me what or how they work out capital gains tax on propertys im in gods country qld if that makes a difference in replys ? Depends on when you acquired the property (pre 19/09/1985 and also pre 2001) ie different states different rules ? Not for CGT

and the second ? is what happens to the standard work super when u stop work early ie say im 50 and stop work to open my own business ? Depends on your age - you can't get at it until you reach the preservation age, which depends on when you were born
what happens to the extra money that i have paid into my employers work super ? can i roll that over into another self funded super and then what happens to the money that my boss has paid in? You can roll all of that into any complying fund - including a self-managed fund, so long as it is complying (for this you will need an auditor)
dose it just sit there till i turn 65 ? Not necessarily - it stays there until your preservation age - then the tax consequence depends on your choices as to pension or lump sum.

hope the questions make sense they do to me but i know what i mean
thks for any info

My answers are embedded in the quote. Super and CGT are really complex areas and the best thing is to get an accountant or lawyer who really knows the area to help. You will need one if you are going into a self-managed complying super fund as they need to be audited to retain their compying status.

If you want me to see if there is anyone close to you (I see that you are in rural Queensland), PM me and I will see if I can find a name (on an all care, no responsibility, basis)

[Gumby]

Capital gains tax can be greatly reduced if you are self employed for the year in which the CG tax is payable. It requires placing a lump sum into super and claiming the maximum allowable deduction for it. It makes a huge difference to your position.

You MUST see an accountant or a creditable financial advisor (not one of those backyard Joe's). You should do this BEFORE you crystalise the capital gain so that they can make sure you do things properly.

As has been said, the costs associated with the property are all deductable aginst the gain. For instance, you bought one for $150,000 and sold it 4 years later for $250,000. The capital gain is $100,00 LESS the costs like stamp duty on purchase (say $8,000), interest on loans (say $20,000), agents fees to sell (say $7,000), legal fees to buy and sell (say $1,000).

the total costs above are $36,000 so the Capital Gain is $100,000 - $36,000 = $64,000

Tax on that is 25% or $16,000.

This is assuming it's an investment property. Your own home is exempt, as has been said.

[Sturdee]

If the property is subject to capital gains tax you can indeed claim all costs associated with you holding the property except those already claimed against the income it generated.


Hence if you claimed interest charges, rates, repairs and maintenance as well as depreciation against the rental income you can not claim these same items to reduce you capital gains liability.

Also you mentioned properties. If you have been regularly buying and selling property the ATO may reasses you as a trader and reissue tax assesment including in your income tax the profit on the sale of properties. Which may mean back taxes, interest and penalties.

Had a client who came to me after being stung after 5 years of buying and selling properties. Did his own returns untill then. Apart from the actual amount he had to pay $ 100K in fines and interest.

So go and see a professional first. Those who act on their own behalf have fools as a client.


Peter.

[Gumby]

Thanks for that Sturdee. My interest component was a bad example. (I was at work and in a bit of a hurry...well, that's my excuse anyway )

[Sturdee]

No worries Gumby.

Ofcourse the converse is also true, in particular capital expenditure to improve the property over the years, in particular the costs to bring the property to an acceptable rental condition in the first place (often forgotten) the capital costs of purchasing the property and the costs of bringing it up to scratch to sell and the capital selling costs, if not already claimed, can all be claimed against Capital gains tax.


Having records can make a big difference.


Peter.

[boban]

Having records can make a big difference.


Peter.

Like the difference between 'up the creek with or without a paddle"

[dzcook]

thanks for the info guys
sigh means that i will have to go and see the dreaded accountant i suppose but still cant put off doing last yrs tax any longer either so will ask him when getting that done

just have areal dread of going to them !!

mainly cause i find they arent helpful at all and mine never asks any questions so i tend to miss out on things that i could of claimed as i dont knoiw any different

anyway thanks for the help

d

[Gumby]

thanks for the info guys
sigh means that i will have to go and see the dreaded accountant i suppose but still cant put off doing last yrs tax any longer either so will ask him when getting that done

just have areal dread of going to them !!

mainly cause i find they arent helpful at all and mine never asks any questions so i tend to miss out on things that i could of claimed as i dont knoiw any different

anyway thanks for the help

d

Then go and see a reputable financial advisor first. One who is right up with the new super laws. My accountant told me sfa about the capital gains deduction available by plonking the money into super. When I ran by the accountant, he said 'oh yeah, of course you can do that, no problem and a good idea."

i'm wondering then, why he didnt suggest it in the first place

[johnc]

thanks for the info guys
sigh means that i will have to go and see the dreaded accountant i suppose but still cant put off doing last yrs tax any longer either so will ask him when getting that done

just have areal dread of going to them !!

mainly cause i find they arent helpful at all and mine never asks any questions so i tend to miss out on things that i could of claimed as i dont knoiw any different

anyway thanks for the help

d

Dz,

It might be time to change accountants, financial advisers can be pretty useless on CGT questions and self managed super is a bit beyond half of them as well. I would suggest who ever you see it is best to writedown your questions before you go, pick up some of what you have read here in your notes and you might be surprised how much you can extract from the bloke (or blokess) sitting opposite.

John.

[Gumby]

Dz,
financial advisers can be pretty useless on CGT questions and self managed super is a bit beyond half of them as well. I .

then you are going to the wrong financial advisors.

[Shedhand]

then you are going to the wrong financial advisors.

I put my trust in an AMP financial advisor and promptly lost a 1/3rd of my investment. I put it into an industry fund and it went gang busters.

Remember also that after July 1st this year Superannuation at retirement/preservation age is tax free in the hand. Currently, only the first $138,000 is tax free. Prior to July 1st you can put as much into super as you want (depending on your age now) after July 1st you are restricted as to how much you can put in in 1 year.

The real estate market is awash with properties at the moment as people cash in the equity in their homes to put the money into super before July 1.

Neither major party Labor or Liberal have any plans to abolish CGT as far as I'm aware because if they did they'd also have to dump Negative Gearing which would cause chaos in the housing and investment property markets.

Have a good read of the info available at www.ato.gov.au
Cheers