In Australia, capital gains (after discounts) are added to income, and then taxed at the nominal rate.

Company tax is set at 30%, while the tax on superfunds is set at 15%.

If you hold a CGT item for longer than 1 year, you will qualify for a discount.

Individuals get a 50% discount, while superfunds get a 33% discount.

 

Example 1.

Capital gain = $1000 Individual Superfund Company (no discounts)
Held for less than 1 year $1000 x 33%(low income rate) = $330 $1000 x 15% = $150 $1000 x 30% = $300
Held longer than 1 year $1000 x 50%(discount) x 33%(low income rate)=$165 $1000 x ((100%-33%(discount)) x 15%= $99 $1000 x 30% = $300

 

Example 2.

Capital gain = $50,000. What is the income tax to be paid?

In this example, we will assume the low income rate for individuals.

Capital Gain      
$50,000.00 Individual CGT Superfund CGT Company CGT (no discounts)
Held for less than 1 year $16,500.00 $7,500.00 $15,000.00
Held longer than 1 year $8,250.00 $4,950.00 $15,000.00

 

Some words of wisdom.

Contribute as much as you can to your superfund, and hold it for at least 1 year for a 10% tax rate.

The maximum after tax contribution to a superfund is $25,000 p.a.

 

 

 

 

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