Dealing with a Capital Gain may not seem too difficult a problem, possibly even a welcome one. Reporting the capital gain for taxation and other regulatory purposes requires particular attention.
Realising a capital gain on the disposal of an asset can arise from transactions other than sales. Your taxation advisor will be able to confirm whether a transaction you have made with an asset MAY be taxable.
Investment offsets to CGT
If you make a taxable capital gain during the year due to the sale of an asset did you know that the capital gain can be offset by either business losses or carried forward/ existing capital losses? You may also consider the use of following strategies help reduce your taxable gain for the year –
- Rebalancing your investment portfolio, taking losses on underperforming assets (and reinvesting to others if cash flow permits). (Beware buying back into the same asset immediately – the ATO has issued a warning about this practice);
- Making a concessional contribution/ roll-over in relevant circumstances, to an eligible superannuation account; and/ or
- Investing some of the realised gains into a diversification of investment assets, including where appropriate, a (negatively-) geared portfolio.
A capital gain is realised when the sale proceeds received exceed the original ‘cost’: determination of the taxable portion of any gain is dependent upon a range of matters – about which you should consult your taxation advisor, but including –
- Acquisition costs such as legal advice, stamp duties etc;
- Holding costs where applicable (that have not been ‘expensed’ during the holding period); and
- Additional capital expended on improvements/ enhancements (and again that have not been ‘expensed’ at the time incurred).
(Tip: To make the determination of any taxable capital gain more convenient to calculate, regardless of when it is realised, ensure that verifiable, detailed asset register records are maintained – and that the register is readily accessible.)
Investments made on an administration platform such as Panorama and other providers make Capital Gains calculations as a matter of course in their Annual Tax Summary provided to investors.
Advice is available
Advisers at Continuum Financial Planners Pty Ltd typically use platforms for the majority of client investments in domestic listed company shares/ equities (directly held, or within a share fund – which also provides access to global equities), cash products (again directly, or through managed funds – and again allowing access to global as well as domestic assets), property (for which the domestic and global assets are only available under fund manager regimes) and a range of ‘alternative’ investment asset classes.
For advice on managing your capital gain, consult with one of our experienced advisers. Any investment strategy devised to minimise the taxation effect will have to be fully implemented within the same financial year as the gain that is realised! Our team works to the mantra that –
‘we listen, we understand; and we have solutions’
that we deliver in
personalised, professional wealth management advice.
To make an appointment with one of our experienced advisers –
- phone our office on 07-34213456, or
- at your convenience, use the linked Book A Meeting facility.
(This article was originally posted by us in May 2008. We occasionally refresh/ update it, most recently in June 2025.)