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Your retirement plan’s CGT shock (with Adrian Raftery) · The Money Puzzle

0:09
Speaker 1: Hello, Welcome to the Australians Money Puzzle podcast. I'm James Kirkby,
0:12
Speaker 1: Welcome aboard. Earlier this year, one of the most popular
0:16
Speaker 1: shows I did was with the author and professor Adrian Raftery,
0:22
Speaker 1: also known as Akka Mister Taxman. Now, I would say
0:28
Speaker 1: unfortunately I recorded the show with Adrian prior to the budget,
0:32
Speaker 1: and I suppose, like many other people, we thought that
0:35
Speaker 1: the budget would be a conventional budget that would have
0:38
Speaker 1: some details that would matter for a week or two.
0:41
Speaker 1: Of course, the budget turned everything upside down, particularly in
0:45
Speaker 1: relation to the tax aspects of investing. So I thought
0:49
Speaker 1: it would be a splendid idea to bring Adrian back. And,
0:54
Speaker 1: knowing what we know now, ask the author of one
0:58
Speaker 1: hundred and runways money on your tax legally, what does
1:03
Speaker 1: he have to say? How are you Adrian?
1:05
Speaker 2: Oh? I'm really well. Thanks shame's how are you going good?
1:08
Speaker 1: Great to have you on the show again. I know
1:11
Speaker 1: what it's like doing books and you try to bring
1:13
Speaker 1: them up to date and you do your best, but
1:16
Speaker 1: you must have been thrown like everybody is, at the
1:19
Speaker 1: scale and scope of the tax changes which have been
1:23
Speaker 1: put through in the budget, which is now I know
1:26
Speaker 1: back in May. But it's I would say it's turning
1:28
Speaker 1: everything upside down. But gee, for most people, the rules
1:31
Speaker 1: that we've lived by for a generation as investors, a
1:34
Speaker 1: lot of them are thrown out the window, aren't they.
1:36
Speaker 2: Well, the tax dolls are still there, so they're just different.
1:40
Speaker 3: So and I've grown up in the environms where where
1:43
Speaker 3: you had I hate the different dates applicable and the
1:46
Speaker 3: sixteenth of August nineteen seventy eight and the twenty first
1:49
Speaker 3: or September nineteen ninety nine, and all these different odd
1:53
Speaker 3: dates over the is they tried to, Yeah, there was
1:55
Speaker 3: a buzzword about twenty five years ago to simplify the
1:58
Speaker 3: tax system. They did reduce out a lot of those
2:01
Speaker 3: and they brought in the fifty percent capital gains discounts.
2:04
Speaker 3: And now there's you know, there's three constants in life,
2:07
Speaker 3: death taxes and changes to tax And yeah, I've written
2:11
Speaker 3: my book now it's been sixteen editions, and the difference
2:15
Speaker 3: between the first edition to the sixteenth, I reckon there's
2:18
Speaker 3: about one third has been rewritten or probably more. We've
2:22
Speaker 3: changes tips just gone straight out left ron center evolves
2:26
Speaker 3: over time.
2:27
Speaker 2: There was admittedly one of.
2:28
Speaker 3: The biggest federal budget budgets in forty years, probably since
2:32
Speaker 3: Capital Gain SAX and Fringe Benefit SAX and given an
2:35
Speaker 3: invitation was introduced back in September nineteen eighty five. So
2:40
Speaker 3: it is I guess it was a seismic shift, and
2:42
Speaker 3: particularly when the last probably fifteen years decade, fifteen years,
2:47
Speaker 3: we normally got all the secrets in.
2:49
Speaker 2: The federal budget in the vans and so we knew
2:52
Speaker 2: there was something happening.
2:53
Speaker 3: With capital gain SAX. We knew there was something happening
2:56
Speaker 3: with negative gearing, but we didn't know the extent of it.
2:59
Speaker 3: We didn't know there was the game SEX was going
3:01
Speaker 3: to extend beyond two shares and bringing.
3:05
Speaker 2: Pre CGT assets as well.
3:07
Speaker 3: So there was all these everything to do and we're
3:09
Speaker 3: limited time with you next zero time to plan and
3:13
Speaker 3: I know we'll talk a little bit later on about it,
3:15
Speaker 3: but boring within self meeting super funds was the last
3:17
Speaker 3: minute addition to get this legislation through and there was
3:20
Speaker 3: nix to no time at all in relation to prepare
3:23
Speaker 3: for that. So I think the whole community or a
3:25
Speaker 3: bit shocked. We weren't expecting it. Some beliefs that we
3:29
Speaker 3: had over the years this is what we should do.
3:32
Speaker 3: You know, there's and then prepare for retirement and sell
3:34
Speaker 3: in retirements. Well that's all changed now, and I guess
3:38
Speaker 3: what has brought back is a year in tax planning
3:41
Speaker 3: is probably more important than that ever over.
3:43
Speaker 2: The next two years. So should I sell those shares?
3:46
Speaker 2: Should I sell that property? Should I hold on some
3:48
Speaker 2: how long should I hold on for? Should I retire out?
3:50
Speaker 2: Not retire?
3:51
Speaker 3: So all these things have changed tremendously, and I must admit, Look,
3:55
Speaker 3: you know, I must thank Jim Charamas and Elbow and
3:58
Speaker 3: Evans because ZV. Garrant say the next few editions and
4:01
Speaker 3: what book. But probably more importantly they've also you know,
4:04
Speaker 3: people are calling me up and they emailing me and yeah.
4:07
Speaker 2: Ordinary people who generally wouldn't talk to them much at all.
4:10
Speaker 3: There was a seismic change to them in their own
4:13
Speaker 3: personal life and what they were planning to do, and
4:15
Speaker 3: they just needed advice.
4:17
Speaker 2: Hey what do I do? Do I sell sho a hold?
4:19
Speaker 1: Or and same here, same with the show. Can I
4:22
Speaker 1: ask you that? Like you mentioned, and it's very important
4:25
Speaker 1: I think for most listeners to in terms of how
4:28
Speaker 1: it all works. We'll just talking about CGT for the
4:31
Speaker 1: moment for as long as I can remember. I mean
4:35
Speaker 1: I'm talking decades. In very broad terms, advisors said to people, listen,
4:42
Speaker 1: this is how you do it. You accumulate your assets.
4:46
Speaker 1: It might be an investment property, it might be shares
4:50
Speaker 1: and your combat shares, et cetera. And what you do
4:53
Speaker 1: is when you retire, suddenly you're in a zero tax environment.
4:57
Speaker 1: And that means your capital gain, your marginal tax rate zero.
5:02
Speaker 1: So you can get your your capital getting down very low,
5:06
Speaker 1: very low, I don't know, ten percent, fifteen percent. And
5:10
Speaker 1: part of the legislation of the new CGT tax, which
5:14
Speaker 1: is probably yet to be fully digested, but it's absolutely crucial,
5:19
Speaker 1: is that there is a minimum of thirty percent that
5:22
Speaker 1: everyone must pay. Does that include everyone? Does that include
5:26
Speaker 1: self funded retirees? Does that include from now on? Does
5:29
Speaker 1: that mean the people I'm talking about?
5:32
Speaker 3: Yeah, from the capital gains made from the first of
5:34
Speaker 3: July twenty seventh, and so you may be sitting on
5:37
Speaker 3: those combat combak chairs you've bought for five dollars forty
5:41
Speaker 3: back in the eighties. Yeah, and you've got an accumulating,
5:45
Speaker 3: incredible brand gain and will continue by the thirty for
5:48
Speaker 3: June next year. Had this big gain that's being locked
5:52
Speaker 3: in and unrealized. It's only from the share price from
5:56
Speaker 3: the thirty for June the closing share price of thirty
5:59
Speaker 3: for June twenty twenty seven.
6:00
Speaker 2: That you're going to be capulating what the capital gain
6:03
Speaker 2: or lost there may be.
6:04
Speaker 3: And from there it's going to be thirty percent under
6:07
Speaker 3: the So we've got a situation where you know, and
6:10
Speaker 3: I'm talking about my book. I'm going to add pages
6:12
Speaker 3: to my book, and it's going to be you brought
6:14
Speaker 3: it before this date, you're brought after this date.
6:16
Speaker 2: So you sold before this date, you sold after this date.
6:19
Speaker 3: Because already these different variables is going to occur, and
6:21
Speaker 3: so you've got to go through this ord decision tree
6:24
Speaker 3: and then okay, what is the day ouation at the
6:26
Speaker 3: thirty twenty twenty seven. From thereafter you're paying. Now it's
6:31
Speaker 3: not going to matter too much of people hold held
6:33
Speaker 3: property or shares for twenty thirty forty years. It's going
6:37
Speaker 3: to make a big difference for those who bought stuff
6:40
Speaker 3: in the last three or four years in the immediate term,
6:43
Speaker 3: in the last three four years and made a significant gain.
6:46
Speaker 3: And it could be cryptocurrency, it could be properties in
6:48
Speaker 3: Western Australia or whatever the case may be, they've got
6:51
Speaker 3: to make a decision or what do I do what
6:52
Speaker 3: I at that point in time, and just to.
6:56
Speaker 1: Really terrify it just in case, folks, we just now
7:00
Speaker 1: this week that in the last draft legislation that's now
7:06
Speaker 1: been through Parliament, the government actually added a provision called
7:09
Speaker 1: a top up tax. And what it means is that
7:13
Speaker 1: just in case you think that there's any way around
7:16
Speaker 1: in the future where because you're retired, CGT can be
7:22
Speaker 1: whittled back or minimized, they've added their top up provision
7:26
Speaker 1: which means that there is no way ever anyone's ever
7:28
Speaker 1: going to pay less than thirty percent, and that includes
7:31
Speaker 1: retirees in the future. So, Adrian, I suppose what it
7:35
Speaker 1: really means is that established way of thinking that was
7:39
Speaker 1: dominant in Australian financial advice build your assets, sell them
7:45
Speaker 1: in retirement, optimize the fact that you can whittle capital
7:48
Speaker 1: gains down to zilch. It's gone, right, it's going to
7:51
Speaker 1: have to be reconsidered. How will people deal with it
7:54
Speaker 1: from here? How would you deal with it if you
7:56
Speaker 1: were writing.
7:56
Speaker 2: A chapter on it.
7:58
Speaker 3: Well, I think we've ridden already in the past you
8:01
Speaker 3: need to look at your after tax returns. And so
8:04
Speaker 3: whether it is an investment bond you to hold for
8:06
Speaker 3: ten years, you look at what is the return across
8:09
Speaker 3: those ten years. What is the tax rate? Okay, maybe
8:11
Speaker 3: zero tax rate, but the return maybe only four percent perrandum?
8:15
Speaker 3: Is it a silk worthwhile? As investing in the high
8:18
Speaker 3: risk stocks, you got to look at tax is one factor.
8:21
Speaker 3: There's a heap of other factors. There's market risk, everything
8:23
Speaker 3: that comes say I'll give you a story.
8:25
Speaker 2: I'll give you a story.
8:26
Speaker 3: Capital Gain SAX came in nineteen eighty five and manager
8:31
Speaker 3: for a work for I don't think Richard is alive
8:33
Speaker 3: these days, So rest in heaven, Richard.
8:36
Speaker 2: He had a large portfolio of shares.
8:38
Speaker 3: At that time and he made a significant amount of
8:41
Speaker 3: money in by September, by September first September nineteen eighty seven,
8:46
Speaker 3: and he was holding to the first of October of
8:49
Speaker 3: nineteen eighty seven. They're about to sell because it was
8:52
Speaker 3: another new quarter of the CGT invexation factors. Yeah, hey,
8:57
Speaker 3: you calculating that he was holding on con Craft itself,
9:01
Speaker 3: it feels substantial.
9:02
Speaker 1: He held on till October to Black Monday and the
9:05
Speaker 1: markets fell twenty five percent.
9:07
Speaker 2: I get your point.
9:08
Speaker 1: But just in terms of tax planning, which is so
9:10
Speaker 1: important to all investors, just spell it out for people
9:14
Speaker 1: that the old rules are gone, right, this whole thing
9:17
Speaker 1: that you wait till you're retire and then you get
9:19
Speaker 1: this CGT super optimized because you're on a marginal tax
9:24
Speaker 1: rate of zero. It's gone, right, You're basically on a
9:27
Speaker 1: marginal tax rate of thirty it's gone.
9:29
Speaker 2: Is that on?
9:29
Speaker 3: So what? So what you need to do is you
9:32
Speaker 3: need the factory in Okay because you're preparing for retirement,
9:35
Speaker 3: and so you need the X amount for comfortable wing
9:37
Speaker 3: growing up, you want to own your own family home.
9:39
Speaker 3: You want to have comfortable retirements, and so this is
9:42
Speaker 3: the dollars you need for your comfortable retirement. What it
9:44
Speaker 3: will mean is when you do your calculations, or if
9:47
Speaker 3: financial plan does your calculations, you're shifting it down the
9:50
Speaker 3: road by a number one or two years. You've got
9:52
Speaker 3: to work for another to one or two years before
9:54
Speaker 3: you can retire and then sell to you know, to
9:58
Speaker 3: cover forward whatever tax you may have. Now it's very
10:01
Speaker 3: much a case by case basis. Yeah, so some people
10:05
Speaker 3: are holding five thousand dollars worth of shares the tax
10:09
Speaker 3: is you know, for them, it's important to them, But
10:11
Speaker 3: it's totally different from someone that has five hundred thousand
10:13
Speaker 3: dollars worth of shares, of which day for one thousand
10:17
Speaker 3: dollars you'd add five hundred thousand dollars with shares in
10:19
Speaker 3: both for four hundred ninety nine thousands, I'm not gonna
10:21
Speaker 3: make much of a difference at all. So it's each
10:23
Speaker 3: particular circumstance you need to run the numbers, you need
10:26
Speaker 3: to talk to you professional advisors. Hey, what is this
10:29
Speaker 3: going to do? How does it affect me and you?
10:31
Speaker 3: And you've got to have a wrista ball as well.
10:33
Speaker 3: So if we don't know what the share price is
10:35
Speaker 3: going to do in the future, we don't know what
10:36
Speaker 3: the properties are going to do. We think we know,
10:39
Speaker 3: but we answered we don't know.
10:41
Speaker 1: Yeah, okay, we hold that part forks. We take a
10:43
Speaker 1: short break back in a moment. Hello, Welcome back to
11:00
Speaker 1: The Australian's Money Puzzled podcast. James Krabby here with doctor
11:04
Speaker 1: Adrian Raftery, author of one hundred moon ways to save
11:09
Speaker 1: money on your tax legally. Okay, now, Adrian, just to
11:13
Speaker 1: cover back on that first segment. I think basically the
11:18
Speaker 1: thrust of all your answers really today is watch it
11:23
Speaker 1: if tax shouldn't really throw your whole books about tax
11:26
Speaker 1: shouldn't drive your investment. Get the investment drive first, and
11:29
Speaker 1: then get the tax aspect.
11:30
Speaker 3: Right?
11:31
Speaker 1: Is that fair to say?
11:32
Speaker 2: Yeah?
11:33
Speaker 3: Sorry is Look, one of my tax tips is don't
11:35
Speaker 3: purely spend for a tax reduction. Because of the avents
11:38
Speaker 3: pay rule. You've got to think you about your cash flow,
11:40
Speaker 3: You've got to think about the returns you're going to make.
11:43
Speaker 2: I can make people's tax pay no tax whatsoever. It's
11:45
Speaker 2: really simple.
11:46
Speaker 3: Whatever your income is, always send you an invoice from
11:49
Speaker 3: tax services and you can pay me.
11:52
Speaker 2: You'll get a legitimate tax deduction. You're paying no tax
11:54
Speaker 2: and no income. You have no money. Well yeah, you
11:59
Speaker 2: think I've got no money in the bank accounts? Yes, yeah, yeah,
12:01
Speaker 2: And so we laugh about that, and so that's when
12:04
Speaker 2: people understand that.
12:05
Speaker 3: And so look, I'm happy. I'm happy to pay the
12:07
Speaker 3: forty seven cents and a dollar. If everyone wants to
12:09
Speaker 3: give me all their income, give them the legitimate tax reductions.
12:12
Speaker 3: And so that's why tax is only one factor. It's
12:15
Speaker 3: an important factor. It's a big factor at thirty percent.
12:18
Speaker 3: And you know what it's actually I mentioned earlier, the
12:21
Speaker 3: minimum tax rate of for capital gain sex is really
12:23
Speaker 3: thirty two percent because the majority of people are paying
12:25
Speaker 3: two percent Medicare levee as well, it's another hidden tax.
12:28
Speaker 1: Does that apply for the self funded retirees?
12:31
Speaker 3: And yeah, if they're over the threshold, if they turn
12:34
Speaker 3: over the threshold in terms of Medicare levee, which is
12:37
Speaker 3: about twenty five thousand dollars or whatever the case may be.
12:40
Speaker 3: But if you know you're making one hundred thousand capital gain,
12:43
Speaker 3: you're paying two percent Medicare levy as well as your
12:45
Speaker 3: minimum thirty.
12:46
Speaker 2: Percent tax, So it's really thirty two percents.
12:48
Speaker 3: So if you've only got you know, it's only ten
12:50
Speaker 3: thousand dollars capital gain made, that's your only income, will
12:53
Speaker 3: there be no.
12:54
Speaker 2: Medicare levy that? So yeah, it really is. You know,
12:58
Speaker 2: I can't stress enough.
12:59
Speaker 3: You know, tax is one variable, and there's so much
13:02
Speaker 3: risk involved in just in terms of the shape prices
13:04
Speaker 3: and crypto prices and property prices.
13:06
Speaker 2: We don't know which way they're going to go.
13:08
Speaker 1: No, Bob, but I suppose, Well, the most important point
13:10
Speaker 1: I suppose for listeners is that in terms of tax planning,
13:14
Speaker 1: the traditional tax planning absolute plank of tax planning in
13:19
Speaker 1: Australia wants to optimize the CGT rules when you retire,
13:23
Speaker 1: because you could get your CGT down to zilch and
13:26
Speaker 1: it now is thirty percent as you say, it's thirty
13:28
Speaker 1: two percent perhaps, and that is a huge change and
13:31
Speaker 1: it will change how people will invest. And we'll talk
13:34
Speaker 1: to some advisors in the near future about that. We
13:37
Speaker 1: leave that for one moment because I have this couple
13:39
Speaker 1: of questions and I really want to want what I
13:40
Speaker 1: have been keeping for you, which have come in from
13:43
Speaker 1: Johan and Adrian and Jay. We'll be back in a moment. Hello,
13:56
Speaker 1: Welcome back to The Australian's Money Puzzle podcast. Ames here
14:00
Speaker 1: with doctor Adrian Raftery. Okay. Questions, Johan, why or h
14:05
Speaker 1: a n Everyone talks about the CGT impact on property,
14:10
Speaker 1: But how does the new CGT rules affect the individual
14:13
Speaker 1: investors post tax return fund shares or exchange traded funds
14:18
Speaker 1: ETFs held for long periods. Will it make investing and
14:21
Speaker 1: growth shares a thing of the past. Well, unfortunately, it's
14:26
Speaker 1: gonna make investing in income shares a thing of the future.
14:30
Speaker 1: I think, what do you think, Adrian, Well.
14:33
Speaker 3: It comes the answer this what the say, Jay, what
14:35
Speaker 3: does API invexation factors are going to be?
14:38
Speaker 1: Can I just say, Adrian, though in the short term,
14:40
Speaker 1: in the immediate term, there's no way on earth that
14:41
Speaker 1: the CPI.
14:42
Speaker 3: And without that we know that, thank thank god, it's
14:47
Speaker 3: thankfully yeah sure, yeah, But and that was the real
14:50
Speaker 3: advantage when the when this sent this young Tame and
14:52
Speaker 3: Apply in nineteen ninety nine, was there was going to
14:55
Speaker 3: advantage short term hold us. It's going to make people
14:59
Speaker 3: think more longer term and thinking about fifteen years, twenty years,
15:02
Speaker 3: thirty years, and reward those who'll hold for that long
15:05
Speaker 3: because you get the benefits of know you're really talking
15:07
Speaker 3: about what the real gain is. So and part of
15:11
Speaker 3: that as well, people have been getting these really big
15:13
Speaker 3: returns the beginning. There's really big returns in a short period.
15:18
Speaker 2: It has to be with risk. There has to be
15:20
Speaker 2: with risk.
15:21
Speaker 3: They can't get there's no certainty you're going to get
15:23
Speaker 3: double your money in a year with anything at all.
15:26
Speaker 3: To be honest, it's so I think what's going to
15:29
Speaker 3: be a lot more people are going to hold for
15:31
Speaker 3: longer periods.
15:32
Speaker 2: That's not my investment trend.
15:34
Speaker 1: Let's turn over, let's portfolio turnover.
15:37
Speaker 2: Yeah, yeah, exactly, that's that's what's one thing is going
15:40
Speaker 2: to happen.
15:41
Speaker 1: And just to the specific issue that you hamm brings up,
15:44
Speaker 1: if tax is more favorable towards income than it is
15:47
Speaker 1: towards growth, then does it make investing in growth that's
15:52
Speaker 1: less attractive?
15:54
Speaker 2: Well depends what what depends what the returns are.
15:57
Speaker 1: But all things being equal, all things been equally, there
16:00
Speaker 1: was two shares and they progressed the same over the years.
16:04
Speaker 2: Well they barely. They don't progress the same. Yeah, but
16:08
Speaker 2: no they're not. You know, you can say if my
16:09
Speaker 2: grandmother had balls. You know, I'm sorry to saying that.
16:12
Speaker 2: Your listeners.
16:13
Speaker 3: Well, you know we've edited that one now. But you
16:15
Speaker 3: got through all these hypotheticals. But it has to be
16:18
Speaker 3: in a case by case basis. And if you know
16:20
Speaker 3: for certain thing is going to be the sact same
16:21
Speaker 3: return of all those would you you probably come down
16:26
Speaker 3: You probably want to take the cash now rather than
16:27
Speaker 3: wait in the future, don't you. Most people would choose
16:30
Speaker 3: that they want to have the available of that now.
16:32
Speaker 3: But then you consider, well, Okay, they're probably in the
16:35
Speaker 3: highest marginal tax rate already that they want to pay
16:37
Speaker 3: forty seven percent now or they want to wait in
16:39
Speaker 3: a retirement pay thirty percents minimum, So there is still
16:44
Speaker 3: a tax differential there. But if they're only owning, you know,
16:47
Speaker 3: if they're if they're a't that thirty percent tax bracket
16:50
Speaker 3: now you know already as it is now versus thirty percents.
16:54
Speaker 3: In the end, it makes no difference if you're going
16:56
Speaker 3: to sell today versus selling twenty years time.
16:59
Speaker 1: As all things being a yeah, all right, thanks for that, Johann.
17:03
Speaker 1: And of course this is never advised. Its information only
17:06
Speaker 1: question from Andrew. I think there would be a number
17:08
Speaker 1: of people who have this question around this time of
17:12
Speaker 1: the year, which should be able to answer in the
17:16
Speaker 1: general manner. If I both cheers in the company for
17:19
Speaker 1: a thousand dollars a few years ago, and over time
17:22
Speaker 1: it dwindled down to zero, that would be most unfortunate.
17:25
Speaker 1: Andrew and is now removed from the ASX. Is it
17:29
Speaker 1: a thousand dollars capital loss on this year's capital tax returning?
17:33
Speaker 1: A great question?
17:35
Speaker 3: So based on those facts now, so generally, what what
17:38
Speaker 3: happened is when companies. Do you get delisted from the
17:41
Speaker 3: ISx and it happens a lot of the.
17:43
Speaker 1: Ones that are up the uses and have gone to zilch.
17:46
Speaker 2: Yes, yeah, so that will god to be a non
17:50
Speaker 2: vised to public company. So they're still alive and they
17:53
Speaker 2: beara belyeve that both are there.
17:55
Speaker 3: They're on a halfway so they've about the administrator, volves
17:59
Speaker 3: or liquid involved. It's only the point in time when
18:02
Speaker 3: the actual administrator says there's no chance of any return
18:05
Speaker 3: and they write a letter to you. I need that
18:08
Speaker 3: point or the company is to registered with ASK I
18:11
Speaker 3: need that point in time. You've actually realized that loss.
18:14
Speaker 1: So what happens in between? Now you're just stuck with
18:16
Speaker 1: this stuff? How hard does it work?
18:17
Speaker 2: Well, technically you stuck with it.
18:19
Speaker 3: It could be two or three Yeah, historically I've seen
18:21
Speaker 3: on average we twa three years, so that you know,
18:23
Speaker 3: go from leaving the soccer change to being officially dead.
18:27
Speaker 2: But you've got you've got a few.
18:29
Speaker 3: You know, a few gamblers if you like out there
18:32
Speaker 3: a few organizations delisted? Is one that I know of
18:35
Speaker 3: that they'll buy those shares off you, So you've physically
18:38
Speaker 3: sold in your transfer across to them. So then you
18:40
Speaker 3: realize the loss. But generally you've got to pay for
18:43
Speaker 3: them to take it off your hands, and then they run.
18:47
Speaker 3: They run the gamble to say, well, maybe they get
18:49
Speaker 3: resurrected and they return and they find a way to
18:51
Speaker 3: come back from from.
18:53
Speaker 1: Yeah, hey, interesting, I never heard of then, Oh Keith.
18:55
Speaker 1: A final question from g Thanks for Rachel. Here's a question.
18:59
Speaker 1: You might be aware that many small businesses have a
19:02
Speaker 1: company structure. I know that buying shares under a company's
19:05
Speaker 1: name was largely discouraged because companies cannot access the fifty
19:11
Speaker 1: tradition of fifty percent CGT discount on like individuals. Now
19:16
Speaker 1: that individuals would likely be paying at least thirty percent
19:19
Speaker 1: CGT morning shares under a company name seems to be
19:24
Speaker 1: no worse.
19:25
Speaker 3: Would you agree, without doubt a lot of our advice
19:30
Speaker 3: over the is was no, don't have any company structure.
19:33
Speaker 3: Have it in your own name, or your spouse's lower
19:35
Speaker 3: incomes name, or your habiting at trust. The trust were
19:39
Speaker 3: very popular in terms of podding investments because they can
19:42
Speaker 3: fly through a that fifty percent CGT discount.
19:44
Speaker 2: So you've got this scenario where okay, it's thirty percent.
19:48
Speaker 2: Now small companies.
19:50
Speaker 3: Their tax rates is actually twenty five percents and so,
19:53
Speaker 3: but it jumps to thirty percent if you're more than
19:57
Speaker 3: twenty more than twenty percent and passive income, so you
20:00
Speaker 3: could have your business income at eighty one percent, your
20:03
Speaker 3: passive income at nineteen percent.
20:05
Speaker 2: You could get that at twenty five percent. So it
20:09
Speaker 2: helps me a small or win there. Yeah, depending what
20:12
Speaker 2: the capital gain is and everything else as well.
20:14
Speaker 3: But there's all these factors that come into place, so
20:17
Speaker 3: you know, so before you know, before the budget, no,
20:20
Speaker 3: don't invest in companies. Think about other structures, thinking about
20:24
Speaker 3: self manag serperviced, thing about trust, thinking about partnerships, thinking
20:26
Speaker 3: about your.
20:27
Speaker 2: Spouse, yourself from a tax perspective. But now you go, well, okay,
20:33
Speaker 2: doesn't really matter.
20:34
Speaker 3: You've got asset protection there in terms of you do
20:36
Speaker 3: the right thing in that company, which is you know,
20:38
Speaker 3: which is pretty cool that you don't have as an individual,
20:41
Speaker 3: you did have it as a trust.
20:42
Speaker 2: So all these things, all these factors come into play.
20:45
Speaker 3: And so I'm not adverse to people from one July
20:49
Speaker 3: twenty seven having their own private company, investing in their
20:53
Speaker 3: private company, accumulating their wealth.
20:55
Speaker 2: That way, or would we say you're a less of virus,
20:58
Speaker 2: less of verse correct. Yeah, okay, I hope.
21:00
Speaker 1: That's useful to you. And thank you everybody for the questions.
21:03
Speaker 1: Keep them rolling the money puzzle at the Australian dot
21:05
Speaker 1: com dot au. Adrian Raffree, thank you very much. I
21:08
Speaker 1: think you'll have more work than the average year when
21:11
Speaker 1: you do the seventeenth version of your book next year.
21:16
Speaker 3: Now I'll look forward to It's thanks again to the
21:18
Speaker 3: treasurer for I'm creating that extra word for me in my.
21:22
Speaker 1: Well, creating the extra demand for all of us, including
21:25
Speaker 1: for this show. That's right, Thanks again, Adrian.
21:28
Speaker 2: Thanks James, thanks for listeners him. You enjoyed the shy At.
21:30
Speaker 1: Today's show was produced by Leah Sammon Glue. Talk to
21:33
Speaker 1: you soon.