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  1. #1

    Default Capital Gains Tax - Australia

    Hey there, has anyone got any knowledge on capital gains tax in Australia.

    I have a 50% share in a townhouse in Queensland but have moved back to NZ to live. I would like to keep the investment for the long term but dont want to pay 30 % plus of the profits to the tax man when it comes time to sell.

    Any advice would be greatly appreciated.


  2. #2
    Join Date
    Jan 2005


    Why not?

    Do you not pay tax on other profits of business?

    Don't sell would be one solution.

    Maybe this thread should be moved to the Aussie section anyway?

  3. #3


    You should get specific advice from an Australian accountant, but my recollection is that CGT in Australia operates as follows:

    - Profits from the disposal of any investment properties are subject to CGT (assuming a gain is made).

    - the gain is calculated as sales price less costs of sale less purchase price less costs of purchase.

    - the CGT rate payable depends on your marginal personal tax rate (assuming the property is owned by a person)

    - However, Australia also has a CGT discount system, which works as follows - the profit from the sale of assets held for 12 months or longer are taxed at 50% your marginal rate

    (In that case, say you had a $50k net gain from an IP after 11 months and your marginal tax rate is 30% = $15k CGT. Sell after 12 months and your CGT is halved).

    - In calculating the time an asset is held the ATO looks at the dates on the contracts (the date on the contract for when you bought the place & the date on the contract for when you sold the place) - not possession and disposal dates.

    (for example, contract to buy signed 1 January for possession on 1 July. Contract to sell signed the following 2 January, with disposal on 1 Feb. On a contract to contract basis you have held the asset for 12 months [1 year and 1 day, to be exact], even though you actually only owned it for 7 months [1 july to 1 feb]. It is my understanding you would be entitled to the CGT discount).

    I'm sure that's all perfectly clear now, which is why I suggested you speak to an accountant.

    Comments may not be relevant to individual circumstances. Before making any investment, financial or taxation decision you should consult a professional adviser.

  4. #4
    Join Date
    Aug 2005

  5. #5
    Join Date
    Jun 2005
    auckland New Zealand


    CGT is "optional" if you are structured correctly. Have to get it right before you start. PM me if you want more info.

  6. #6
    Join Date
    Nov 2003


    cgt in Australia is not optional in Australia. If you buy in Australia capital gains tax will be paid when you sell.

  7. #7
    Join Date
    Oct 2003


    Nigel - it appears that Dean knows of a tax loophole/scam to avoid CGT in Australia. wink wink nudge nudge

  8. #8
    Join Date
    Nov 2003


    Well Dean can also get you 10% capital growth in 3 months in Australia he can also get you into heaven. Who Am I to question.

  9. #9
    Join Date
    Feb 2006
    Transition to Auckland


    The only way that you would be able to get a property CGT free (technically they pay tax at 0%) in Australia is if it is owned by a superannuation fund and the members of the funds are drawing a pension from the fund (meaning they are at least 55 years old).

    Whilst there could be debt on the property the LVR would be no greater than 65% and the cost of debt is between 2 and 3% above standard rates (given the loan is a limited recourse facility). So the usual strategy of borrowing to the eyeballs and praying for a rise in value is not really going to work in this one, the equity component is going to be very high.

    Dean may be alluding to the vendor being a trader for the purposes of CGT and using the CGT rollover relief (replacing the asset within 2 years), in this case he is not getting around the CGT, he is simply deferring it until a later date. Even then there are a myriad of tests which need to be met and for the vast majority of property 'speculators' there is limited if any ability to access these concessions (it is generally only available to builders and developers) and not available buy and hold or buy and flick.

    Dean could also be alluding to a company or trust declaring the capital gain as standard income, then technically he is getting around the CGT but is paying income tax which is twice as much.

    The data matching between the state revenue offices and the ATO is incredible, unlike the old days when there was no correlation between them. The chances of not declaring a capital gain on sale and getting away with are very low.

    If there is another way around it, I would be genuinely impressed.

  10. #10
    Join Date
    Aug 2005


    Dean are you saying you can structure your way out of paying property taxes upon disposal of real assets in Australia.

    Or are you just refering to the fact that developers pay income tax and gst instead of CGT.



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