AVZ Discussion 2022
- Thread starter GazDix
- Start date
Lucas Don Velor
Regular
Could accountants please confirm!?
For those who potentially stand to gain a substantial capital amount, you could take advantage of your unused concessional contributions (UCC)…
e.g. Capital gain of $1,000,000 - UCC (e.g. $100,000) = pay tax on $900,000 + 50% CGD for those eligible.
As well as reducing your tax and increasing super, you’ll also get 30% back on the $100,000 UCC… Hope this is correct and helps others out!
For those who potentially stand to gain a substantial capital amount, you could take advantage of your unused concessional contributions (UCC)…
e.g. Capital gain of $1,000,000 - UCC (e.g. $100,000) = pay tax on $900,000 + 50% CGD for those eligible.
As well as reducing your tax and increasing super, you’ll also get 30% back on the $100,000 UCC… Hope this is correct and helps others out!
Azzler
Top 20
Hey mate thanks for bringing this Tax policy to my attention, I didn't know about it and so just looked it up.
It's very interesting and it makes me wonder.
So I'd only pay 15% tax on a super contribution instead of the max of 45%, or if we can get the CGD, 22.5%, which on your hypothetical $100,000 contribution, means I keep an extra $30,000, or $7,500 (if CGD) but that all goes into my super.
Out of $100,000 untaxed income, in one case I get either $55,000 or $77,500 (CGD) of that in my pocket,
OR my super gets $85,000 of it.
Interesting decision to make!
But thanks again for bringing this to my attention
P.S. You can see how much unused concessional contributions you are eligible to contribute by visiting MyGov, ATO.
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Azzler
Top 20
While we're on the topic of positive outcomes and tax minimisation, we may well be getting a payout before the end of this financial year.
Well one can only pray and hope of course
If you don't have private health cover, and your payout is going to be considerable, you could be in for a massive hit in the way of 1.5% extra tax for the medicare levy.
Even though there's only a few months left in the year, you can still take a small gamble to minimise it by taking out basic accident cover.
I decided to take that gamble 2 weeks ago when I worked out how much that would cost me otherwise.
Hope that helps someone too
Well one can only pray and hope of course
If you don't have private health cover, and your payout is going to be considerable, you could be in for a massive hit in the way of 1.5% extra tax for the medicare levy.
Even though there's only a few months left in the year, you can still take a small gamble to minimise it by taking out basic accident cover.
I decided to take that gamble 2 weeks ago when I worked out how much that would cost me otherwise.
Hope that helps someone too
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Prod
Member
Lucas I'm not an accountant but I do believe that CGD under the superfund is 1/3 and not 50%. This still isn't too bad given that the maximum tax rate under the superfund is 15%. hope I'm wrong and happy to hear from anyone who may be more qualified.
If your AVZ holding is in your SMSF, then if you are old enough, change your super from Accumulation Mode to Pension Mode before the AVZ buy out. This way you will pay zero tax on your AVZ capital gain. This is what I will be doing, but noting that at present my SMSF is still in Accumulation Mode.
A tax deductible contribution to your super might be a good option too
In some circumstances I believe you can bring forward 3 years of contributions meaning you can contribute $300k in one year and claim it as a tax deduction
Pay 15% tax on the contribution to your super fund on the way in might be better than paying tax at higher marginal rates of 30%-37%-45% depending on how big your overall gains are
Later when in pension mode you can draw an income from your super fund tax free
But I'll leave the fancy tax talk to @TheCount .....I think he actually knows his fruit
EDIT: I think @Azzler was sort of touching on this same area......if that doesn't sound a bit too weird
EXTRA EDIT: I've apparently fked up on the tax deductibility thing....dammit
In some circumstances I believe you can bring forward 3 years of contributions meaning you can contribute $300k in one year and claim it as a tax deduction
Pay 15% tax on the contribution to your super fund on the way in might be better than paying tax at higher marginal rates of 30%-37%-45% depending on how big your overall gains are
Later when in pension mode you can draw an income from your super fund tax free
But I'll leave the fancy tax talk to @TheCount .....I think he actually knows his fruit
EDIT: I think @Azzler was sort of touching on this same area......if that doesn't sound a bit too weird
EXTRA EDIT: I've apparently fked up on the tax deductibility thing....dammit
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With the 3 year bring forward rule you can deposit 3 x $120k per person of after tax money into super in one year. This is called a non-conesssional contribution to your super. You cannot claim the $360k as a tax deduction, but you do not pay the 15% tax on the contribution to your super. Perhaps obviously, in the subsequent 2 years you cannot deposit any non-conesssional funds into your super.
Carlos Danger
Top 20
Medicare Levy Surcharge (Only applicable if taxable income for MLS purposes is over 97k for individuals or 194k for couples on tier 1 (1% MLS) with higher amounts for tier 2 (1.25% MLS) and tier 3 (1.5% MLS)) is calculated on a pro rata basis if a hospital policy is taken out throughout the financial yearWhile we're on the topic of positive outcomes and tax minimisation, we may well be getting a payout before the end of this financial year.
Well one can only pray and hope of course
If you don't have private health cover, and your payout is going to be considerable, you could be in for a massive hit in the way of 1.5% extra tax for the medicare levy.
Even though there's only a few months left in the year, you can still take a small gamble to minimise it by taking out basic accident cover.
I decided to take that gamble 2 weeks ago when I worked out how much that would cost me otherwise.
Hope that helps someone too
So anyone taking it out this financial year will only avoid whatever percentage how many days are left until June 30 from taking out the cover divided by 365 is
Example today is 77 days left until June 30 so 77/365 = 21%. Therefore 79% of the 1.5% if on tier 3 equals 1.18% of taxable income for MLS purposes would still need to be paid.
But if hospital cover is taken out before June 30 2025 and kept until July 1st 2026 it would avoid the full MLS if due for next financial year whether inclusive of any potential AVZ payout or not
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Mute22
Regular
Thanks for that. Apologies if I got the whole concessional non concessional tax deduction thing wrong
Fuck!.....now I have to go down the tax rabbit hole again!!
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In 2003, a mate in Wollongong bet big on OXR while I bet big on PNA (both Cu explorers in Laos).
While I held mine through the downturn of the GFC and out the other side, he sold his entire holdings around 2006. He pocketed >$3m profit in one hit. Capital Gains Tax, PAYG and other issues sucked the life out of his windfall and almost drove him mad. However, he still managed to drive around in a Lexus.
I never forgot that salient lesson, and as a result time my sales across financial years where possible.
Cheers
F
The question is will we get a choice with AVZ?
Not counting chickens but if we do get some sort of deal the structure of it is very much out of our hands
If it triggers one big tax/cgt event it would be a tax nightmare
Hence I'm trying to get ahead of the curve and working on the worse case scenario (one single massive tax event) then what are the other strategies available to minimise the pain????....... read "tax"!
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