AVZ Discussion 2022

Prod · Monday at 5:48 PM

Lucas Don Velor said:
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!

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.

Jongo · Monday at 5:52 PM

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.

Azzler · Monday at 5:55 PM

Loving these tax tips!

Winenut · Monday at 5:55 PM

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

Remark · Monday at 6:13 PM

Love the positivity here, I'm just hoping we all have CGT problems soon

Jongo · Monday at 6:37 PM

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 · Monday at 7:02 PM

Azzler said:
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

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 year

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

Flight996 · Monday at 7:09 PM

This is what I was saying the other day:

Cash + scrip + royalties is the best mix return, and made better if we can spread the largess over multiple financial years.

Cheers
F

Mute22 · Monday at 7:17 PM

Flight996 said:
This is what I was saying the other day:

Cash + scrip + royalties is the best mix return, and made better if we can spread the largess over multiple financial years.

Cheers
F

Big mine, big tax headache.

Frank · Monday at 7:21 PM

https://x.com/AshleeLaur39941/status/1911704852583031167

https://x.com/brendo726/status/1911705725900128765

Winenut · Monday at 7:35 PM

Jongo said:
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.

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!!

Flight996 · Monday at 7:37 PM

Mute22 said:
Big mine, big tax headache.

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

Samus · Monday at 7:49 PM

Great tax tips people, only one problem.

Winenut · Monday at 7:58 PM

Flight996 said:
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"!

Jazz · Monday at 8:23 PM

Winenut said:
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"!

Is it likely that a deal of any sort would even result in tax being payable in a 2025 tax return? With all the ins and outs of our current situation I would not have expected a taxable transaction to occur this side of July.

I’m not saying a deal can’t be done soon, but I’m assuming the date of any deal is not the date tax is calculated from for shareholders.

Anyone care to comment on their experience with other takeovers, or similar deals? What has been the timeline from announcement through to actual taxable transactions occurring for shareholders.?

Thaz · Monday at 8:49 PM

Jongo said:
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.

This is a different scheme, that people are talking about.

They're referring to the: Unused concessional cap carry forward.

https://www.ato.gov.au/tax-rates-an...ation-rates-and-thresholds/contributions-caps

Unused concessional cap carry forward

From 1 July 2018 if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts.

The first year you will be entitled to carry forward unused amounts is the 2019–20 financial year. Unused amounts are available for a maximum of 5 years, after which they will expire.

FYI - tax agents are not able to advise on whether someone should contribute into super - due to regulatory changes.. this requires an AFSL and a Statement of Advice. They can, however, advise you on what your unused concessional cap carry forward amount is, based on the ATO records. However, the ATO records may be out of date or incorrect, so you should also cross reference it with your own understanding (e.g. if you were employed for the last 5 years - one would expect that you would have used a portion of your concessional contributions cap over the last 5 years.

Few things to note
- Contributions to super to claim a deduction and to get your income below a certain amount will not avoid Division 293 Tax. This would be an additional 15% tax on the contributions made to your superfund in the years that you adjusted taxable income is greater than $250K (from the top of my head). This can be paid by the superfund or by you.

- The Deductible Contributions to super will be added back in determining your adjusted taxable income (for Centrelink reasons (child care rebate eligibility), MLS, etc).

General advice on this topic is highly not recommended as following general advice may result in inadvertent tax implications

So tax and/or financial advice should be sought when dealing with superannuation assets and funding/investment strategies.

Side note - my wife is a registered tax agent :^)

PutUsernameHere · Monday at 8:57 PM

Lucas Don Velor said:
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!

You need to consult an accountant or a financial adviser. If you have a gain of $1M, you will personally be taxed on that $1M gain, less a 50% CGT discount if applicable. So say $500,000 gets added to your assessable income.

You should also look up the limits on unused concessional contributions and eligibility to use them depends on meeting criteria such as your super not being over a certain balance.

If you met the criteria, you could use those contributions to affect/reduce your assessable income. In general, additional concessional contributions can be removed from your assessable income and are instead taxed at a flat rate of 15% in super. However, you also need to consider how Div 293 tax might come into play.

I personally don't know whether it's inclusive of all income or salary only. But if you had a net $500k gain, then you'd be over the income limit for Div 293 which adds an additional 15% tax on your contributions.

It would still likely be advantageous difference of 30% tax vs 47%, but just need to be aware there's limits and those are personal to each individuals situation.

Randenj · Monday at 9:05 PM

Azzler said:
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

Like all of us, I'm hoping for a resolution that may or may not involve a payout sooner rather than later, but for me, if it is to be a payout, then July 1 will do nicely. It then gives a clear 12 months to make wise decisions instead of rushed ones.

Edit 1: I might add, anything after July 1 is also ok, for the exact same reasons. Except for June 2026. But then, it too might be ok, because we'll have had (hopefully) immenent notifications of what is to come...........

Retrobyte · Monday at 9:35 PM

Flight996 said:
In 2003, a mate in Wollongong bet big on OXR

Flight996 said:
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.

If I'm grossing $3m I'd choose better than a tarted up Toyota

oxxa23 · Monday at 10:17 PM

Thaz said:
This is a different scheme, that people are talking about.

They're referring to the: Unused concessional cap carry forward.

https://www.ato.gov.au/tax-rates-an...ation-rates-and-thresholds/contributions-caps

Unused concessional cap carry forward
From 1 July 2018 if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts.

The first year you will be entitled to carry forward unused amounts is the 2019–20 financial year. Unused amounts are available for a maximum of 5 years, after which they will expire.

FYI - tax agents are not able to advise on whether someone should contribute into super - due to regulatory changes.. this requires an AFSL and a Statement of Advice. They can, however, advise you on what your unused concessional cap carry forward amount is, based on the ATO records. However, the ATO records may be out of date or incorrect, so you should also cross reference it with your own understanding (e.g. if you were employed for the last 5 years - one would expect that you would have used a portion of your concessional contributions cap over the last 5 years.

Few things to note
- Contributions to super to claim a deduction and to get your income below a certain amount will not avoid Division 293 Tax. This would be an additional 15% tax on the contributions made to your superfund in the years that you adjusted taxable income is greater than $250K (from the top of my head). This can be paid by the superfund or by you.

- The Deductible Contributions to super will be added back in determining your adjusted taxable income (for Centrelink reasons (child care rebate eligibility), MLS, etc).

General advice on this topic is highly not recommended as following general advice may result in inadvertent tax implications

So tax and/or financial advice should be sought when dealing with superannuation assets and funding/investment strategies.

Side note - my wife is a registered tax agent :^)

Agree on thaz's notes here...

But, my wife just spends the money I make as a tax agent... have an accounting firm.

There's a lot of minimisation strategies... but, it's horses for courses and depends on everyone's own financial position and plans/goals

If a transaction involved a sale of shares there's still a small chance it could happen this year. Although more likely next year... if it involved the sale of the project, then a dividend would be next year, not this year... the company would likely give people more time before declaring a framed dividend I would think... and avz pay some tax first

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