Ann: Staggering Kingia Gas Discovery, page-609

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PokerMoe

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02/09/19

18:53

Post #: 40281445
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Originally posted by Hardcash ↑

Poker Moe....and others.

Here is how the Australian tax office (ATO) will treat your capital gains.

Lets keep the example simple, and the assumptions simple, for get about tax free thresholds and tax rates etc etc for now.

Eg1. Fred earns $100,000 pa working as a coal miner. He also owns 100,000 STX shares which he bought for $0.50 and sold for $1. Fred has owned his STX for less than 12 months. This means Fred's capital gain is treated as "income" and the ATO taxes Fred as though he earnt $150,000 in that financial year. $100,000 from working and $50,000 from the proceeds of his STX shares.

Eg2. Everything is the same except Fred owns his shares for longer than 12 months before he sell for $1. In this instance he is entitled to a 50% concession on his $50,000 gain. That means only $25,000 of Fred's $50,000 is taxed.

What many people don't understand is how that $25,000 is taxed....it's very simple......The ATO treat (tax) Fred as though earnt $125,000 in that financial year. His gain is effectively added to his income and his marginal rate of tax (MRT) will increase with the amount of gain he makes.

Saying that a zero MRT (due to no income) will result in no capital gains tax is misleading....even if Fred earnt no income for the tax year as soon as he sells his shares he will pay some (not much) tax on his $25,000.

Hope this helps.

Bring on the TH !!!

HC

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“Saying that a zero MRT (due to no income) will result in no capital gains tax is misleading”

Never said that.

https://hotcopper.com.au/posts/40260031/single

Last edited by PokerMoe: 02/09/19

STX Price at posting: 29.0¢ Sentiment: Buy Disclosure: Held
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