• Limit the Liability and Get the Right Advice. 

    20, October 2020 – Harbourside News

    The financial year-end has been and gone (again). How was your tax advice?

    When you consider the amount of time it takes to get all the information together, have preparation discussions with your accountant, and then wait for the dreaded call “you have a liability of…..”, is it fair that the wrong tax advice can result in unnecessary tax liability? The simple answer is no.

    We all know that paying tax is necessary; it cannot be avoided plain and simple!  We pay tax for a myriad of reasons and Australia is just another country that imposes tax upon its nation (in 2019, the second-highest in the world).   So, what happens when you sell an asset, such as shares or real estate, and actually make a profit on the sale? Well, you may need to pay tax in the form of capital gains tax and this is calculated as part of your annual tax return. Hurrah…!

    OK, perhaps not worth celebrating just yet.

    The good news is you don’t pay capital gains tax when you sell your primary residence or when you make a loss on an investment (now you can celebrate) but if you own an investment property, which depending on the information source can vary between 12% – 20% of all Australians, then it’s worth considering how to limit your tax exposure when selling an asset. With respect to the changing profile of share investors, it may also be worthwhile considering the implications of capital gains tax.   

    OK, tell me more…!

    Four very simple and short words – Get the Right Advice!

    Talk to accountants and independent valuers who know their stuff. Look at the different elements to calculating capital gains tax and how this affects your overall financial objectives. You may want to delay the sale of the asset till a time that works better with your personal life goals. Consider how long you have had the asset; is it worth holding on to that little bit longer (your accountant will explain why); and keep good records of all spending. The ATO considers capital gains (or losses) as part of your assessable income. Essentially, the more you earn, the more you may have to pay. 

    As Commercial Lawyers we do not provide tax advice, but we know experts who do. If you have concerns, contact Harbourside today and we’ll introduce you to Tax Experts at all levels.

    Harbourside Legal Commercial – great advice, brilliant Lawyers.
    Call +61 (0) 2 9955 6692 | info@hslegal-commercial.com.au

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