Thinking of selling your ETFs in retirement? One 45-year-old asked if a looming tax change means he'd be better off moving the money into super now.
Reader question
Hi Paul, under the new CGT rules, will my future net capital gain from the sale of ETFs be taxed at 30%, regardless of the tax-free threshold?
Is it better to sell now and add the money into my superannuation as a non-concessional contribution instead?
I am 45 and planning to sell the investment at 60 when I retire. - Giovanni
Paul's response
Interesting question, Giovanni.
Yes, if you sell your ETFs in years to come, you will pay the old, 50% discount CGT on gains up to July 1, 2027 and the new CGT on gains after this date.
Does super look very advantaged? Yes, it does.
What you need to do is to talk to your super fund or adviser.
The correct answer for you depends upon your income, amount currently in super, your need to access funds and personal situation.
But as I mentioned to Fran, for the vast majority of people, super is, what else can I say... super.
It is very attractive if you don't need the money until retirement.
At this time in life, where else can you keep up to $2 million, paying no tax on earnings, able to draw both your pension and any lump sums you need tax free?
Start by chatting to your super fund.
But neither of us needs to be Albert Einstein to figure out that with salary sacrifice only being taxed at 15% from our pre-tax salary and concessional payments we make with our own money only paying 15% tax on income and 15% on capital gains, until we go to pension phase, where no tax is payable up to $2 million in super, I know where I want my money!
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Comments
There will be an immediate cost as you would trigger CGT on the EFT when you make an in-specie asset contribution. At 45 Giovanni is probably earning an income and will pay CGT now (with 50% discount) at their marginal rate.
Firstly the question was around the minimum 30% tax on CGT.
This change will mean most people planning to use these investments for retirement are better off in Superannuation.
If the strategy now is to sell down shares and transfer to super then contribute to the max in concessional and replace that income with sold shares.