Running discussion on SP, page-66956

@anguscameron
Go see a good financial adviser and have them work in tandem with your accountant. Only you know your situation and long term needs, and a an adviser can deliver a strategy that will help provide you with the best outcome. Working with your accountant means the information in that strategy will be as accurate as possible, and they can note any tax headwinds based on previous tax years financials.

How much you get taxed purely depends on your current income and how many shares you decide to sell. Net capital gains are basically added on top of any other income at the EOFY in your tax return, and the tax you pay is based on your marginal tax rate (see below). If you have any losses, they will be applied against your gross capital gains. Then any capital gains on shares which have been owned for 12+ months will be subject to a 50% discount. Therefore, it is best to offset losses against gains on shares owned less than 12 months, if possible.

I can't remember your figures, but you'll get the gist. If you went an sold $1M of shares with a $120k base cost, you'd have $880k gross capital gain. Assuming no losses and owned all of these since 2017 or before, then 50% gains discount applied to the lot = $440k net capital gain. Let's say your income is $100k, so your net taxable income becomes $540k, you'd be taxed: $51,667 + $360,000 x 0.45 = $213,667 all up. You'd also then fall into the High Income Earner category (over $250k) and subject to Div 293 tax which essentially reduces the concession on your concessional contributions by 15%, though can be paid via super or personally.

There's a number of options as people have outlined, i.e. staggering your sales across multiple financial years, leveraging your shares, etc. There may also be contributions to super that can assist. It would really depend on the reason you're selling and what you intend to do with the capital next. Speak to someone who can actually help you work this out and then base a strategy around your personal situation.

The above is by no means a recommendation of what you or anyone reading this should be doing, nor are the figures depicted meant to be accurate to any particular persons situation. They are for demonstration purposes only. The commentary is my opinion only and not advice, do your own research and seek professional assistance, etc etc.

Resident tax rates 2021–22 - https://www.ato.gov.au/rates/individual-income-tax-rates/

Taxable income | Tax on this income

0 – $18,200 Nil

$18,201 – $45,000 19 cents for each $1 over $18,200

$45,001 – $120,000 $5,092 plus 32.5 cents for each $1 over $45,000

$120,001 – $180,000 $29,467 plus 37 cents for each $1 over $120,000

$180,001 and over $51,667 plus 45 cents for each $1 over $180,000