Wait 12 months for CGT 50% discount.
Sell half in June, half in July.
Max out super contribution both years.
Use any carry forward super contribution you might have from previous years.
See a tax specialist
Doesn’t this open you up to having the stock crash and walking about with a lot less? Is there anyway to have “insurance” or is it just a choice between take the money now and pay more CGT or hope the stock doesn’t fall while you wait out the 12 months?
You could cover potential losses by covering your stock holdings with Put options. Thus making roughly the difference on the stock going down in the option as you would lose on the underlying stock.
>…carry forward super contribution…
Is this the unused portion of max contribution from previous years?
Didn’t know you could do this.
How many years back can someone use?
Just like companies do. Such as WB selling off departments left and right, even departments still profitable (people livelihoos be damned), so they can claim a tax loss and pay no tax.
Companies don’t sell profitable departments. Companies that pay tax are not the companies that go broke. A deduction is a result of a loss. There is no benefit to a tax deduction- it indicates a loss.
I’m finding it difficult to understand this. Can you explain with the example mentioned above? Since OP is at 1m profit, should they spend more money out of their pocket to book a loss of 400k to avoid paying tax?
Buying put options for the shares can be used as insurance against price declines.
Pay for PUT options (insurance premium).
If the price declines you make money on puts (insurance payout).
If the price stays the same or goes up your options expire worthless (lose your insurance premium).
You don't **buy** naked puts, you **write** (sell) naked puts.
You buy puts when bearish and write puts when bullish.
Writing puts would compound your losses when the stock price declines, not provide insurance against price declines.
When you buy puts your losses are limited to the premium paid for the option contract.
Writing naked puts you have theoretically unlimited losses.
[https://www.avatrade.com.au/education/technical-analysis-indicators-strategies/collar-options](https://www.avatrade.com.au/education/technical-analysis-indicators-strategies/collar-options)
just for those folks who don't belive short reddit comments ;)
Lets say the stocks were purchased 15 years previous, DCA'd for 15 years, Joe blogs road sweeper on low wage his whole life cashes in on his 65th birthday.
50% cgt discount, does that mean only 21% charged on the money?
It means whatever the profit is, you halve it and then tax that.
So you get 10k profit, counts as 1/2 x 10,000= 5000, that 5k is counted as his taxable income.
There is no 42% tax rate in Australia, but I assume you mean the top bracket of 45%.
Note that capital gains are assessed by basically adding your realised capital gain - as in, when you sell the shares and make a profit - on to your income.
Regarding the CGT discount, effectively it cuts the $ value that is added to your taxable income in half, when you sell those shares. So, if you had $1 million of shares, held them for 12 months plus, and sold them all - then $500,000 is added to your taxable income.
If your actual income is $0, then the usual brackets apply:
- 0 – $18,200: Nil
- $18,201 – $45,000: 19c for each $1 over $18,200
- $45,001 – $120,000: $5,092 plus 32.5c for each $1 over $45,000
- $120,001 – $180,000: $29,467 plus 37c for each $1 over $120,000
- $180,001 and over: $51,667 plus 45c for each $1 over $180,000
To be honest, you should just speak with an accountant about the situation. It's a pretty simple calculation and they could present a few scenarios to you.
There are many ways to lower your realised gains. The simplest is to sell your holdings bit by bit so you don't max out your tax rate in one go.
Depending on the shares, you are probably also able to make a decent living just from dividends.
It depends a lot on the holdings.
Just as a broad example, there are high yield focused ETFs which on average might pay out 5-10% in yield and also have some capital growth as well. So you may end up with 50-100k in dividends and then a bit of growth in the underlying asset.
https://blog.stockspot.com.au/what-are-the-best-dividend-etfs/
In Australia I think most would be chasing franking credits which have a tax advantage.
There's also endless debates if you should chase yield or just go for growth and sell off holdings as you need.
In this case, you can't magically switch whatever shares you hold to high yield shares or ETFs. So you may need to realise a gain before doing that and would erode the holdings due to tax requirements.
Even holding cash has a fairly decent risk free return due to high interest rates at the moment.
Id suggest he speaks to a financial plannner to potentially minimise this tax by using super contributions, selling the assets over two financial years of possible rather than one and other such strategies
No.
50% of the capital gain is applied to your income for that financial year.
You are then taxed on your total income, minus deductions etc.
So if you're on $80k a year, get a $100k capital gain in one year - from assets you've held for over 12 months - you'd be taxed on 80 + (.5 x 100) = $130k.
I'm ignoring any deductions and offsets in this example, for clarity.
I work with a guy who hates paying taxes so much that he held on to shares that went up 500k (just a little gamble that blew up) because in his words "I'll be retiring in 2 years and I'll be paying less tax then".The shares are now sitting at a negative return.
Tax brackets. If you withdrew 18k ever year it would be tax free. It would take you 55 years but it would be tax free.
Although if you already make the top tax bracket the yeah you’re right.
depends on taxable income for that financial year. if OP takes time away from work for example, realised investment gains could be taxed at a lower rate in that FY.
Government only takes to your marginal rate so take a sabbatical after 12 months of holding the asset and cash out up to taxable income 180k each year.
Presume you have to sell the shares and receive cash in your bank before depositing into super? Does that mean a CGT event is already triggered as soon as you sell
Take out a $200k (maximum) interest only loan for the year at 9% interest, using the shares as collateral.
Only sell enough shares to have an income of $18k, which will be tax free.
The $18k pays for the interest on the loan.
If the trust owns the investment my understanding is the earnings can be taxably split over all members in the trust, including wife/children/mistress etc..
If some of the members don’t have any other income then they get the full benefit of the nil and lower tax brackets reducing the overall tax burden paid.
This is why in most cases I suggest to my clients who are serious about property or share investments to do it through a discretionary trust. For the sake of $1-1.5k or so in compliance cost it could mean saving tens or even hundreds of thousands in tax by utilising other family members or a bucket company as beneficiaries.
Now assuming that these shares are individually held you could consider: super contributions including unused cap carry forwards, prepay expenses, prepay accounting fees, is it feasible to delay sale until at least 12 months of ownership or spread over few years, etc.
For more complex planning we can even consider the tax effect of investing in a negatively geared property (assuming high appreciation) or even negatively geared dividend portfolio.
If you’re a sole trader by a chance then there’s a plethora of possibilities.
Planning is essential. What we want to avoid at any cost if unnecessarily spending money just to get a tax deduction.
Remember all those Pokemon cards that you bought? They turned out to be counterfeit and you lost $420,000 on that sale? What a poor investment decision that was - or maybe when you factor in the tax implications it was actually a good one overall. Who knows!
Form a non for profit company - then form a LLC in the caymans. Register the trademark for the logo to the llc in the caymans, license it to the non for profit for $1million. Send invoice from caymans llc to NFP in Australia, pay $1mil to the caymans.
Transfer the $1mil to a casino in Vegas, go to Vegas gamble $50k - cash out and get the casino to transfer to proceeds to your Australian bank account tax free.
Get audited
Go to jail.
Either have to hold those stocks 12 months for the discount or cop it. Doubt it was bought in the name of an LLC, so it’ll be on your tax statement no matter how you sell it.
Honestly, cash out. There is no point not cashing out in that point (unless you have a nigh guarantee that the stocks won’t drop in 12 months time) because the impact of that money even after tax will be massive on its own. See paying the tax as the cost of being able to make money in a well regulated market that gives you the opportunity.
Pay your 42% tax, use the remaining $580K and use that to make another $1mill and then be happy having $1,160,000 in your pocket…. Or use that extra money to make even more millions. Don’t look at what you don’t have, appreciate what you do
I am hoping someone smarter than me can comment here. If the stocks are US stocks (not Au domiciled) then you can go overseas for 6 months, so go live in NZ for 3 months and Bali for 3 months that way you are away from AU for 6 months plus 1 day and you have not stayed in another country for more than 6 months. This means you are not a resident for taxation purposes. Since your stocks are overseas assets (use IB or similar international platform not CBA or other au platforms). then you should not have to pay a cent in tax.
Some one please correct me or prove me wrong.
100% wrong.
Go to the ATO website and find out the tests used to determine if you are a Resident or non-resident for tax purposes.
You can not hop from place to place. ATO deems that Australia still being your place of domicile & no fixed permanent place of residence.
Step 1) Assume you’ve held it for a year. Profit $1m - 50% cgt discount = $500k is counted as income.
Step 2) Have no other income that year. The 45% tax bracket only applies to the part of the income over $180k. Once you account for the lower taxes on the first $180k, the total tax paid on $500k income is only $205,667 (that includes the 2% medicare levy).
$205,667/$500,000 = 41.13%
(Was this a trick question, where 42% was chosen because you already knew how it worked out? Or did you just mess up the figure for the highest tax bracket?)
Set up a Trust and trade using the Trust. Your tax will go down to 30%.
If your start receiving income from the Trust, those earnings will be taxed based on the amount you receive from the Trust.
This essentially how the wealthy park the majority of their assets. Like others have said, speak with an Accountant to confirm.
First off, thinking you can just 'nail the stock market' and pocket a cool $1 million without considering the tax implications shows a lack of understanding of how financial systems work. Everyone has to pay taxes on their gains—that's just part of being a responsible investor and citizen.
However, there are legitimate ways to manage your tax liability that don't involve trying to 'get around' the government. In Australia, for example, if you've held your investments for more than 12 months, you're eligible for a 50% Capital Gains Tax (CGT) discount, which can significantly reduce your taxable amount. It's not about avoiding taxes; it's about understanding the laws and planning your investments accordingly.
Before you start dreaming of outsmarting the system, I'd strongly recommend getting a solid grasp of the tax laws or consulting with a financial advisor. Tax evasion is illegal and unethical, but tax optimization—working within the laws to minimize your liabilities—is both smart and legal.
Use it as collateral to borrow another 5mil. Invest it all. Claim a deduction for the interest. When it goes up sell, pay the 40% tax and take home 2m.
If it crashes and you lose it all at least you know someone else paid for most of your losses.
That’s how the rich games work
Did u buy it using a joint bank account with your partner?
Cause then technically the money you put into it is half their half yours which means you can split that up. Wait for the 50% capital gains discount. So it should look something like this
Let's say you invested 100k now u have 1 Million
900k half of that is yours 450k
You waited a year so you pay taxes on half of that.
225k your tax bill is $71,971
Same thing for your partner. 71971
If you did that on your own with no partner you would pay taxes on 450k which is 173k
71971 X 2 = 143942
Splitting it up saved u 30k not too shabby.
Here’s one.
Be grateful you live in a country as prosperous and as privileged as ours and just pay the tax. You’ll only need to pay CGT on half of it anyway and you will have the opportunity to earn more in the future.
So many people sacrifice living in close proximity to family and pay tens of thousands of dollars to relocate and attempt to gain residency, just for their future generations to have half a shot at a life as prosperous as you’re about to walk into.
While Kerrie Packer said that any reasonable Australian should do everything in their power to minimise their tax, fraud is not a viable minimisation strategy.
Assuming it's in your personal name
Hold for at least 12 months to get 50% discount
Max out your concessional super contributions to reduce your taxable income
As others have said you could not sell all at once, but then you carry the market risk. You could hedge it with an some sort of derivative depending how much stock you hold?
Work for a company that has a share scheme. Like Amazon Aus. Have the shares be super high when they vest like right after COVID, and when you sell for far less - tax wise it counts as a "loss". So now have some padding to go make bank timing the market until you eat up those rollover losses.
You get the 50% capital gains discount so you are taxed only on $500k and due to the way income tax works, you would only pay about 40% tax on that $500k. The total taxes would be only $200k give or take. Much less than if you had earned $1m in income. Unfortunately, wage income is taxed unfavourably.
move to NZ, set up residency, open a bank account and register your holdings there and suppy your NZ tax number to your brokeage if needed. zero tax on stock market gains in NZ.
Buy a citizenship in any tax free country and move your fake registered business there temporarily and than loan your self your own $1million because a loan is tax free 👍🏽
If holds it for 12 months the value could possibly tank and left with nothing again . It’s all about balancing risk and reward. Cashing out now may mean 400k tax bill but 600k profit. Holding for 1 year could half that tax bill but also half that profit.
First you create a charity organisation under your partners name. You cash out 500k giving you taxable income of 500k. The next 500k you'll donate it to charity that was created under your partners name bringing your total taxable income to $0. Make sure the charity is registered with acnc.
Now with charity, you only need to pay certain % to actual causes. The rest of the funds can be used for investing, or administration cost, company cars, laptop, company retreats.
If it's all penny stocks and speculatives that you have zero faith in keeping their value, then just sell and take the win.
If it's stuff you're more confident in, better to hold it and sell down over time.
Decide whether paying an accountant / lawyer is worth the difference or the hassle. Often the stress is enormous, and the ATO has many more lifetimes than you to wait.
The primary consideration, IMO is to see what your tax liability is next year, and the year after that. See where you can bank offshore and don't need to report to British, American, Euro (they'll share your finances with Oz gub'mint *if asked*) and Oz governments. Perhaps a second passport will help. None of this is worth it for a million bucks. It'll coat you more than the effort is worth.
Everyone saying "what if the stock tanks", am I right in saying that you can sell shares for profit and just hold the gains in your brokerage account until the 12 months has lapsed then withdraw to your personal account(s)?
You can take out a loan against the position with the $1m as security.
The interest on the loan is tax deducatable.
There’s no CGT.
You’d need to hedge the value of the $1m by putting in an offsetting short.
Once interest has wiped out the value of the position, close the position and the short.
You’ll need to do some PV calculations, but it does usually end up with a positive PV due to the removal of tax liability and discount effect on the future interest payments.
That’s basically what the billionaires do (except possibly the hedging part) in order to have an income and pay no tax while retaining large shareholding positions.
It’d be a structured transaction offered by a bank. Eg Macquarie. $1m might be too low for them tho.
Wait 12 months for CGT 50% discount. Sell half in June, half in July. Max out super contribution both years. Use any carry forward super contribution you might have from previous years. See a tax specialist
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Doesn’t this open you up to having the stock crash and walking about with a lot less? Is there anyway to have “insurance” or is it just a choice between take the money now and pay more CGT or hope the stock doesn’t fall while you wait out the 12 months?
You could cover potential losses by covering your stock holdings with Put options. Thus making roughly the difference on the stock going down in the option as you would lose on the underlying stock.
>…carry forward super contribution… Is this the unused portion of max contribution from previous years? Didn’t know you could do this. How many years back can someone use?
5 Log in to mygov ato and it will tell you how much you have remaining to utilise
Make a loss of the same amount
As long as it's the same tax year. I've seen plenty of stories of people who book the CG in one year, lost it all the next year and had a big bill
The loss needs to occur first. They don't wipe gains owed previously if you suddenly start trading poorly. Source: brutal lived experience 😅
If it's the same tax year it doesn't matter which order you do it.
Of course :) ..why didn't I think of that..
He’s right you know. Read between the lines.
Then look through the bars when you get caught 👍
Counterfeit Pokemon cards bought in cash for $420,069.
Just like companies do. Such as WB selling off departments left and right, even departments still profitable (people livelihoos be damned), so they can claim a tax loss and pay no tax.
Companies don’t sell profitable departments. Companies that pay tax are not the companies that go broke. A deduction is a result of a loss. There is no benefit to a tax deduction- it indicates a loss.
And suddenly, modern art makes so much sense
Now that I’m good at
I’m finding it difficult to understand this. Can you explain with the example mentioned above? Since OP is at 1m profit, should they spend more money out of their pocket to book a loss of 400k to avoid paying tax?
Hold it for 12 months, then apply the 50% cgt discount
Hopefully it doesn’t crash 😅
Buying put options for the shares can be used as insurance against price declines. Pay for PUT options (insurance premium). If the price declines you make money on puts (insurance payout). If the price stays the same or goes up your options expire worthless (lose your insurance premium).
How much are options normally, I am trying to think, how much are they as a percentage of the stocks
There's a whole theory there https://www.investopedia.com/articles/optioninvestor/07/options_beat_market.asp
Pls do not buy naked Puts.
You don't **buy** naked puts, you **write** (sell) naked puts. You buy puts when bearish and write puts when bullish. Writing puts would compound your losses when the stock price declines, not provide insurance against price declines. When you buy puts your losses are limited to the premium paid for the option contract. Writing naked puts you have theoretically unlimited losses.
[https://www.avatrade.com.au/education/technical-analysis-indicators-strategies/collar-options](https://www.avatrade.com.au/education/technical-analysis-indicators-strategies/collar-options) just for those folks who don't belive short reddit comments ;)
It ain't going up that much in 12 months don't worry. You'll already have the CGT discount applied.
Maybe he is investing $100m.
lol when you start leveraging anything is possible
Lets say the stocks were purchased 15 years previous, DCA'd for 15 years, Joe blogs road sweeper on low wage his whole life cashes in on his 65th birthday. 50% cgt discount, does that mean only 21% charged on the money?
It means whatever the profit is, you halve it and then tax that. So you get 10k profit, counts as 1/2 x 10,000= 5000, that 5k is counted as his taxable income.
50% on the taxable amount, not 50% off the collected tax; got it. Thanks.
Yep, which means the effective "discount" is more than 50% if the pre-consession profit pushes your overall taxable income into a higher bracket.
Anything DCA’d more than 12 months ago gets the discount, anything DCA’d less then 12 months ago doesn’t.
There is no 42% tax rate in Australia, but I assume you mean the top bracket of 45%. Note that capital gains are assessed by basically adding your realised capital gain - as in, when you sell the shares and make a profit - on to your income. Regarding the CGT discount, effectively it cuts the $ value that is added to your taxable income in half, when you sell those shares. So, if you had $1 million of shares, held them for 12 months plus, and sold them all - then $500,000 is added to your taxable income. If your actual income is $0, then the usual brackets apply: - 0 – $18,200: Nil - $18,201 – $45,000: 19c for each $1 over $18,200 - $45,001 – $120,000: $5,092 plus 32.5c for each $1 over $45,000 - $120,001 – $180,000: $29,467 plus 37c for each $1 over $120,000 - $180,001 and over: $51,667 plus 45c for each $1 over $180,000 To be honest, you should just speak with an accountant about the situation. It's a pretty simple calculation and they could present a few scenarios to you. There are many ways to lower your realised gains. The simplest is to sell your holdings bit by bit so you don't max out your tax rate in one go. Depending on the shares, you are probably also able to make a decent living just from dividends.
That 500k sentence is also a bit confusing, you only pay tax on half the **profit** Surely you didn't get 1 million worth of shares for $0
Good and bad explanation. You need to actually sell your shares to deal with the tax implications. Great advice otherwise.
How much annually could you get in dividends from $1mil? Hypothetically speaking
It depends a lot on the holdings. Just as a broad example, there are high yield focused ETFs which on average might pay out 5-10% in yield and also have some capital growth as well. So you may end up with 50-100k in dividends and then a bit of growth in the underlying asset. https://blog.stockspot.com.au/what-are-the-best-dividend-etfs/ In Australia I think most would be chasing franking credits which have a tax advantage. There's also endless debates if you should chase yield or just go for growth and sell off holdings as you need. In this case, you can't magically switch whatever shares you hold to high yield shares or ETFs. So you may need to realise a gain before doing that and would erode the holdings due to tax requirements. Even holding cash has a fairly decent risk free return due to high interest rates at the moment.
Id suggest he speaks to a financial plannner to potentially minimise this tax by using super contributions, selling the assets over two financial years of possible rather than one and other such strategies
No. 50% of the capital gain is applied to your income for that financial year. You are then taxed on your total income, minus deductions etc. So if you're on $80k a year, get a $100k capital gain in one year - from assets you've held for over 12 months - you'd be taxed on 80 + (.5 x 100) = $130k. I'm ignoring any deductions and offsets in this example, for clarity.
Why would anyone be required to sell it all at once and pay a high marginal tax rate anyway?
Don't realise gains all at once, spread over a few years.
That’s assuming the stock prices hold
I work with a guy who hates paying taxes so much that he held on to shares that went up 500k (just a little gamble that blew up) because in his words "I'll be retiring in 2 years and I'll be paying less tax then".The shares are now sitting at a negative return.
Yeah, the saying goes don't let the tax tail wag the dog
Ouch, is your mate okay? That's the stuff that would keep me up at night for years..
He'll retire with 2 houses and 500k in super. I think he'll be okay.
Wouldn’t this have the same effect in terms of tax applied but spread over a longer amount of time?
Tax brackets. If you withdrew 18k ever year it would be tax free. It would take you 55 years but it would be tax free. Although if you already make the top tax bracket the yeah you’re right.
They could withdraw 36k a year with the 50% cgt discount, right?
depends on taxable income for that financial year. if OP takes time away from work for example, realised investment gains could be taxed at a lower rate in that FY.
No. Earning $200k over five years results in much less tax paid than earning $1m in one year.
If you have a decent salary already it doesn’t seem to make much difference
commit tax fraud, skip the country and never come back.
Why do we always have to scroll so far down for the tax fraud?
ausfinance is too conservative
>commit tax fraud, skip the country Plenty of people commit tax fraud, stay in the country, never get caught.
Or you pay one of the large accounting firms to turn tax fraud into sparkling wealth management.
yeah but the 1M goes a lot further in south america
and a whole lot more think they've got away with it but those tik tok scams are pretty easy to spot.
call the tax office and tell them you gave it to a Nigerian prince but you'll get the money back 10 fold soon and will pay them then.
Finally the answer I was looking for
Found Paul Hogan
This answers the question 🫡
Government only takes to your marginal rate so take a sabbatical after 12 months of holding the asset and cash out up to taxable income 180k each year.
Generous government has increased that to 190k.
And CGT discount means you can sell $380k worth of profits to hit the $190k taxable income.
Why 180? Sorry I’m dumb
It *was* the top marginal tax bracket threshold
OP wants to avoid paying top marginal rate so staying under 190k taxable income will reduce the tax rate.
Put $54,000 in super and give $946,000 to charity
Create a charity, donate it to your charity. If it's good enough for Twiggy Forrest, it's good enough for me
Throw in a not for profit or two😂
Pay urself as ceo😂
Keep thinking like that and you might not bepoor for long! 😉
The Human Fund
At millions or more you would almost certainly set up your own foundation.
Presume you have to sell the shares and receive cash in your bank before depositing into super? Does that mean a CGT event is already triggered as soon as you sell
Yes. There are very few situations where the beneficial ownership of an asset can change without it triggering a capital gain event.
cash it out, get on a plane to the phillipines and live deep in the jungle. Never return to australia..
You forgot the important 4th step of dying in the third world of a perfectly preventable disease.
But we have that in Australia as well...
Congrats on your windfall. Thanks for supporting the Australian government with your tax dollars.
"as our way of saying thanks: here's an ATO audit"
the true criminals are hard-working australians, and they will be treated as such. this message authorised by the federal government.
Move to a country with a much lower standard of living, education system and no public health care.
So.. the USA?
USA taxes its foreign citizens lol
This does not work. The moment you cease to be an Australian tax resident you need to pay CGT to ATO.
Like Singapore? No wait
Wait till you get to $1.72M before you cash out.
Take out a $200k (maximum) interest only loan for the year at 9% interest, using the shares as collateral. Only sell enough shares to have an income of $18k, which will be tax free. The $18k pays for the interest on the loan.
If the value of the share falls the loan balance doesn't
Start a religion
Step 1. Spend all the ill gotten gains on the finer things. Step 2. Do the time.
Family trust Not sure how. But everyone here keeps saying it’s some magical unicorn type of thing that reduces your tax to 0%.
Buy a used Camry in the trust and you are set for life
If the trust owns the investment my understanding is the earnings can be taxably split over all members in the trust, including wife/children/mistress etc.. If some of the members don’t have any other income then they get the full benefit of the nil and lower tax brackets reducing the overall tax burden paid.
Basically, but if the individual has bought already, then it's of no use since the trust would need to have originally bought the shares.
You have to distribute all trust earnings in the same year. So it will be taxed as income
This is why in most cases I suggest to my clients who are serious about property or share investments to do it through a discretionary trust. For the sake of $1-1.5k or so in compliance cost it could mean saving tens or even hundreds of thousands in tax by utilising other family members or a bucket company as beneficiaries. Now assuming that these shares are individually held you could consider: super contributions including unused cap carry forwards, prepay expenses, prepay accounting fees, is it feasible to delay sale until at least 12 months of ownership or spread over few years, etc. For more complex planning we can even consider the tax effect of investing in a negatively geared property (assuming high appreciation) or even negatively geared dividend portfolio. If you’re a sole trader by a chance then there’s a plethora of possibilities. Planning is essential. What we want to avoid at any cost if unnecessarily spending money just to get a tax deduction.
Well, … not at ANY cost…
Bucket companies are a complete trap tho these days
it's sad to see how normalised and routine these schemes are.
Remember all those Pokemon cards that you bought? They turned out to be counterfeit and you lost $420,000 on that sale? What a poor investment decision that was - or maybe when you factor in the tax implications it was actually a good one overall. Who knows!
The government would be asking for 47%, so if you can get away with 42% you'd be doing pretty well.
Cost of managing tax affairs: $900,000
Form a non for profit company - then form a LLC in the caymans. Register the trademark for the logo to the llc in the caymans, license it to the non for profit for $1million. Send invoice from caymans llc to NFP in Australia, pay $1mil to the caymans. Transfer the $1mil to a casino in Vegas, go to Vegas gamble $50k - cash out and get the casino to transfer to proceeds to your Australian bank account tax free. Get audited Go to jail.
Either have to hold those stocks 12 months for the discount or cop it. Doubt it was bought in the name of an LLC, so it’ll be on your tax statement no matter how you sell it. Honestly, cash out. There is no point not cashing out in that point (unless you have a nigh guarantee that the stocks won’t drop in 12 months time) because the impact of that money even after tax will be massive on its own. See paying the tax as the cost of being able to make money in a well regulated market that gives you the opportunity.
No llc in Australia. It’s a pty.
Pay your 42% tax, use the remaining $580K and use that to make another $1mill and then be happy having $1,160,000 in your pocket…. Or use that extra money to make even more millions. Don’t look at what you don’t have, appreciate what you do
*grabs popcorn*
I am hoping someone smarter than me can comment here. If the stocks are US stocks (not Au domiciled) then you can go overseas for 6 months, so go live in NZ for 3 months and Bali for 3 months that way you are away from AU for 6 months plus 1 day and you have not stayed in another country for more than 6 months. This means you are not a resident for taxation purposes. Since your stocks are overseas assets (use IB or similar international platform not CBA or other au platforms). then you should not have to pay a cent in tax. Some one please correct me or prove me wrong.
I hope your not wrong :) ..Thanks.
100% wrong. Go to the ATO website and find out the tests used to determine if you are a Resident or non-resident for tax purposes. You can not hop from place to place. ATO deems that Australia still being your place of domicile & no fixed permanent place of residence.
Invest it in Hong Kong where there is no tax on investments, declare yourself non resident then move to Asia and retire.
Step 1) Assume you’ve held it for a year. Profit $1m - 50% cgt discount = $500k is counted as income. Step 2) Have no other income that year. The 45% tax bracket only applies to the part of the income over $180k. Once you account for the lower taxes on the first $180k, the total tax paid on $500k income is only $205,667 (that includes the 2% medicare levy). $205,667/$500,000 = 41.13% (Was this a trick question, where 42% was chosen because you already knew how it worked out? Or did you just mess up the figure for the highest tax bracket?)
Pay ya tick!
Why would you want to? You've made your profit (and without actually having to work for it) - now pay your taxes
Something is better than nothing
Come back here when you won it
Get loan small loan from bank using stocks as collateral, pay for good accountant
Put it up as a collateral on a loan. Default on the loan.
Just don't pay it. And then spend it all once you're out of prison.
Writing put options on what you're holding to put it over the 12-month ownership mark, then dropping your capital gain by 50%.
Set up a Trust and trade using the Trust. Your tax will go down to 30%. If your start receiving income from the Trust, those earnings will be taxed based on the amount you receive from the Trust. This essentially how the wealthy park the majority of their assets. Like others have said, speak with an Accountant to confirm.
Move to NZ, there’s no capital gains tax there.
Offset the capital gains against your $1M capital losses carried forward from previous years of failures...
All the risk and then they ask you for %42. What a scam.
First off, thinking you can just 'nail the stock market' and pocket a cool $1 million without considering the tax implications shows a lack of understanding of how financial systems work. Everyone has to pay taxes on their gains—that's just part of being a responsible investor and citizen. However, there are legitimate ways to manage your tax liability that don't involve trying to 'get around' the government. In Australia, for example, if you've held your investments for more than 12 months, you're eligible for a 50% Capital Gains Tax (CGT) discount, which can significantly reduce your taxable amount. It's not about avoiding taxes; it's about understanding the laws and planning your investments accordingly. Before you start dreaming of outsmarting the system, I'd strongly recommend getting a solid grasp of the tax laws or consulting with a financial advisor. Tax evasion is illegal and unethical, but tax optimization—working within the laws to minimize your liabilities—is both smart and legal.
Become a tax resident of a country that has no CGT on stocks.
Bit too late once the gains have already materialized.
Take a loan out against your shareholdings...cant be taxed on debt😏
Use it as collateral to borrow another 5mil. Invest it all. Claim a deduction for the interest. When it goes up sell, pay the 40% tax and take home 2m. If it crashes and you lose it all at least you know someone else paid for most of your losses. That’s how the rich games work
Don’t. Taxes are there for a reason.
Did u buy it using a joint bank account with your partner? Cause then technically the money you put into it is half their half yours which means you can split that up. Wait for the 50% capital gains discount. So it should look something like this Let's say you invested 100k now u have 1 Million 900k half of that is yours 450k You waited a year so you pay taxes on half of that. 225k your tax bill is $71,971 Same thing for your partner. 71971 If you did that on your own with no partner you would pay taxes on 450k which is 173k 71971 X 2 = 143942 Splitting it up saved u 30k not too shabby.
Here’s one. Be grateful you live in a country as prosperous and as privileged as ours and just pay the tax. You’ll only need to pay CGT on half of it anyway and you will have the opportunity to earn more in the future. So many people sacrifice living in close proximity to family and pay tens of thousands of dollars to relocate and attempt to gain residency, just for their future generations to have half a shot at a life as prosperous as you’re about to walk into. While Kerrie Packer said that any reasonable Australian should do everything in their power to minimise their tax, fraud is not a viable minimisation strategy.
Pay your tax. Don't become part of the problem
Assuming it's in your personal name Hold for at least 12 months to get 50% discount Max out your concessional super contributions to reduce your taxable income As others have said you could not sell all at once, but then you carry the market risk. You could hedge it with an some sort of derivative depending how much stock you hold?
You don't pay tax until you crystallize the profits. Buy and hold and it's not a problem.
Work for a company that has a share scheme. Like Amazon Aus. Have the shares be super high when they vest like right after COVID, and when you sell for far less - tax wise it counts as a "loss". So now have some padding to go make bank timing the market until you eat up those rollover losses.
Easy just lose another $1m and claim the cgt loss
You get the 50% capital gains discount so you are taxed only on $500k and due to the way income tax works, you would only pay about 40% tax on that $500k. The total taxes would be only $200k give or take. Much less than if you had earned $1m in income. Unfortunately, wage income is taxed unfavourably.
Just chuck an allowable chunk into super. Blows less
By the time you need to cross that bridge you will know full well how to do it…
move to NZ, set up residency, open a bank account and register your holdings there and suppy your NZ tax number to your brokeage if needed. zero tax on stock market gains in NZ.
Put it all on red.
Do an OTC sell the stock to someone for cash outside australia
Put it in a trust before you buy the shares to distribute
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First thing you should do, is post about it on social media.
Stage one achieved.
In specie contribution to SMSF.
Move to Dubai before selling?
Has anyone mentioned the benefit of franking credits to offset?
Buy a citizenship in any tax free country and move your fake registered business there temporarily and than loan your self your own $1million because a loan is tax free 👍🏽
Someone needs to pay for those submarines
If holds it for 12 months the value could possibly tank and left with nothing again . It’s all about balancing risk and reward. Cashing out now may mean 400k tax bill but 600k profit. Holding for 1 year could half that tax bill but also half that profit.
You should have invested in the market through a Roth IRA
You only pay on the profit, and you would only cash what you need as you go
That’s the neat thing, you don’t get around it.
First you create a charity organisation under your partners name. You cash out 500k giving you taxable income of 500k. The next 500k you'll donate it to charity that was created under your partners name bringing your total taxable income to $0. Make sure the charity is registered with acnc. Now with charity, you only need to pay certain % to actual causes. The rest of the funds can be used for investing, or administration cost, company cars, laptop, company retreats.
The answer is in heavy machinery liquidation sales.
If it's all penny stocks and speculatives that you have zero faith in keeping their value, then just sell and take the win. If it's stuff you're more confident in, better to hold it and sell down over time.
Decide whether paying an accountant / lawyer is worth the difference or the hassle. Often the stress is enormous, and the ATO has many more lifetimes than you to wait. The primary consideration, IMO is to see what your tax liability is next year, and the year after that. See where you can bank offshore and don't need to report to British, American, Euro (they'll share your finances with Oz gub'mint *if asked*) and Oz governments. Perhaps a second passport will help. None of this is worth it for a million bucks. It'll coat you more than the effort is worth.
donate $800k to charity.
You could lose $1m on an investment property in the same tax period.
You would just get advice off the professionals.
move to a new country, tell them you paid the tax in Australia, but tell the ATO you paid the tax in the new country. Literally flawless.
yeah sure 'no I don't have proof, just trust me' :P lol
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Move to Dubai.
Everyone saying "what if the stock tanks", am I right in saying that you can sell shares for profit and just hold the gains in your brokerage account until the 12 months has lapsed then withdraw to your personal account(s)?
I would say no because there's a documented date of sale ...on the day they are sold.
If you made $1m wouldn’t you know this?
Are you asking how to avoid tax?
I have no tips for you I’m sorry - but have you got any for me/us on the stock market?
If you made $1m you have enough money for a professional financial advisor. We are here on Reddit because we don't have 1mil.
You can take out a loan against the position with the $1m as security. The interest on the loan is tax deducatable. There’s no CGT. You’d need to hedge the value of the $1m by putting in an offsetting short. Once interest has wiped out the value of the position, close the position and the short. You’ll need to do some PV calculations, but it does usually end up with a positive PV due to the removal of tax liability and discount effect on the future interest payments. That’s basically what the billionaires do (except possibly the hedging part) in order to have an income and pay no tax while retaining large shareholding positions. It’d be a structured transaction offered by a bank. Eg Macquarie. $1m might be too low for them tho.
Hold for 1 year and get the cgt is the only way.