Personal Finance
Newcastle Herald
7 June 2007
Noel Whittaker
Q I am looking to cash in my managed fund that I have had for more than two years to invest in an investment property, and according to the ATO I will only have to pay CGT on 50 per cent of the gain due to the length of the investment exceeding 12 months. If I am reinvesting the total amount from the fund into an investment property within the same tax year, am I exempt from any CGT?
A Once you redeem the managed funds you will trigger a CGT event. There is no provision in the Australian tax system to roll over a capital gain into a newly acquired asset. Depending on your circumstances it may be worthwhile considering borrowing the entire purchase price of the rental property to save redeeming the share-based investment and paying CGT.Q I was interested in your recent comment about death tax. From an estate planning perspective, the loss of 16.5 per cent death tax is a new concept which I am trying to understand. Can you explain a "non-tax dependant". Does this mean a super fund pays a 16.5 per cent tax if not passed on to dependants? A For the purposes of the superannuation tax, the term non-tax dependant means anybody not financially dependant on you. A spouse is always a dependant irrespective of their assets or income.Q A couple of years ago I obtained a home equity facility and have used the funds exclusively to invest in shares. I borrowed about $40,000 and the share portfolio is now valued at $75,000. I would like to realise some of this profit and use the proceeds to reduce non-deductible debt.If I were to sell say $20,000 worth of shares, would I still be able to claim all of the interest payable on the home equity loan as a tax deduction.A If you borrow for investment and then sell part of that investment, the deductible portion of the investment loan will be proportionately reduced.Send your questions to noelwhit@gil.com.au. Readers should seek their own expert advice before making financial decisions.
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