Hidden death tax in the budget

[pmccarthy]

5 hours ago, octave said:

OK I think I have my answer.

 

https://share.google/aimode/gHgADhB5bpfnRHy3G

 

I think if you don't have a valuation, you can use what is called an "apportionment formula", but in some circumstances, this may be less advantageous.

Yes, that's it thanks. And my experience is that the valuer has to be a recognised valuer by the tax department, and they charge a fortune. So, in the past you could just work from what you had paid but in June next year you may need a valuation that you can't afford. Or just cop it on the chin. And I don't know what a collectible is in general, what about that bloke who restores army tanks?

Edited yesterday at 04:27 AM by pmccarthy

[Jerry_Atrick]

Farq.. I agree with PM.. it will bring a lot of ordinary people into the net. $500 is not a lot these days and unless you can prove what you have bought is used on a frequent basis, it will be classed as a collectible and if you sell it as yiu don't use it anymore and you make a profit, you pay.

 

But if you make a loss, you can only offset that loss against other gains on collectibles you sell within the tax year.. not even other CGT payable assets let alone your total assemble tax. 

 

This is what I call pernicious tax... And Google tells me thar the official rate of inflation isn't taken into account, but some formula applied by the ATO, which is usually lower than the inflation rate. 

 

This is what I call a pernicious tax or a money grab.

 

There is a carve out for personal use, but you have to prove it and it cant be occasional; it has to be frequent.. In theory, that jewellery necklace bought for wearing on the wedding day and only dragged out for special occasions will he caught.. so yeah, it will affect a lot of ordinary people.

 

 

Edited yesterday at 05:33 AM by Jerry_Atrick

[octave]

In practice, for the ordinary person, I suspect it will be difficult to enforce.  A CGT already exists; it is just the method of calculation and valuation that has changed (as far as I can see).  If Onetrack sells me some of his lovely junk, how would the ATO even know?

 

Since I have been downsizing, I have sold many possessions, mostly they have lost value, but some musical instruments have gained in value and are probably subject to CGT.  Pretty hard to detect, though. 

  

[willedoo]

In my situation the majority of my aviation collection has come from overseas, so there has been a postage and freight component to the total cost. Also since the government scrapped the $1,000 exemption on paying GST on imported goods, there's a 10% GST component in the total cost, which is 10% of the cost of the item + postage + any customs fees. When working out the cost of the item for determining a capital gain or loss, does the tax department go by the cost of the item only or that plus all other costs incurred.

[octave]

The only CGT I have first-hand experience of was on the sale of my house on 44 acres.  As has been discussed on this forum in the past, there is a rule that you are liable for CGT on everything over 5 acres (2 Hectares).   Unlike CGT on collectables, you are legally allowed to do the valuation yourself (but you may need to show your workings out).

 

The exempt 5 acres need not be one parcel of land, so you choose all the most valuable bits to exempt. In my case, the house and infrastructure (water tanks, septic tanks, etc. and a strip of river frontage. I then was able to deduct the cost of ownership (rates etc maitanance of fences and other things).

 

I was able to aggressively (but legally - I think) whittle the CGT bill down to $1500.   I did half expect a please explain letter; however, it never came, and 9 years later, it is too late for them, unless they detect out-and-out fraud.

 

I did plenty of research, and I actually found in an obscure place a tax department internal document that listed the conditions that trigger an audit with regard to land sales, so I felt on safe ground. The thing is, compared to some people selling land, my case was pretty trivial. It does not really make sense for ATO to spend vast sums of money detecting the sale 1 watch or piece of jewellery in a private sale.  This is not tax advice!  

[willedoo]

I agree there octave. People selling small items are probably not  going to come under scrutiny. More likely if you sell a large valuable coin or jewellery collection in one lot. A bit like centrelink with applications for pension or income support. Technically you are supposed to list the value of personal items and I'd say most people undervalue or don't list them at all. That's accepted and I've never heard of anyone getting an audit of their personal items.

[onetrack]

They would need to double or triple the size of the audit teams to be able to deal with the amount of "collectibles" of modest value, that regularly change hands. So much of it is done in cash transactions.

[Siso]

7 hours ago, facthunter said:

Which side Looks after the Rich the most?. Nev

All sides

 They all have people lobbying talking bribes with them. Do you really believe different

[Jerry_Atrick]

I neglected to include the difficulty of enforcement (train/phone at the time), but if when you sell someone wants a receipt, you are going to be, if only slightly, a little more at risk because the next bloke nay get audited and he produces a receipt from you.

 

Granted, the risk is tiny, but regardless $500 for a single item that doesn't have an exemption for, say not having up to a reasonable amount of the type of collectable  for normal use whether you can prove it is for normal use or not is scummy and shows they may be prepared to use it against the little people when there are far bigger fish to fry.

 

It's about a culture as opposed to the probability of enforcement... IMHO

 

 

Edited 19 hours ago by Jerry_Atrick

[octave]

Just to be clear this is not a new rule.   The method of valuation has changed.  I am not necessarily disagreeing with your points, though.

[pmccarthy]

Some things they track. For example, all aircraft change of registrations are notified to the tax office.

[pmccarthy]

A capital gain on a personal use asset is subject to CGT if it cost you more than $10,000 to acquire the asset.

Capital losses on personal use assets are ignored. This means you can't use a capital loss on a personal use asset to reduce capital gains on other assets (including other personal use assets).

Personal use assets are CGT assets that you keep for your personal use or enjoyment.

They include:

boats
furniture
electrical goods
household items
an option or right to acquire a personal use asset
a debt resulting from    
a CGT event involving a CGT asset kept for your personal use
making a private loan to a family member or friend.
The following are not classed as personal use assets:

collectables – these may be subject to CGT
your main residence, which is generally exempt from CGT
cars, which are exempt from CGT.
If you dispose of personal use assets individually that would usually be sold as a set, you get the exemption only if you acquired the set for $10,000 or less.

[Jerry_Atrick]

6 hours ago, octave said:

Just to be clear this is not a new rule.   The method of valuation has changed.  I am not necessarily disagreeing with your points, though.

I know the collectibles CGT wasn't introduced by Albo et al, howeve, Labior did introduce CGT in 1985 as a more equitable tax. At the same time, it did reduce income and some corporate taxes. However,the reforms were only at the top marginal tax rate so, with the exception of bracket creep, don't impact too many Aussies. Yet the thresholds for the tax to apply haven't changed since 1985. And even then, for the average punter - even a hobbyist. There is no threshold for a reasonable turnover as a hobby (i.e. selling off say one stamp to fund the purchase of another). AAlso not being able to offset against losses of othe CGT assessable asset classes is also pernicious. 

 

The cultural comment was aimed at the Aussie governments as  a whole. Not just Albo... Not indexing thresholds, for example, is a cultural thing,. It is niot necessarily the coal face workers I am talking about. 

 

Is the CGT a stealth death tax? Yes.. In Australia, you don't pay inheritance tax on receiving the property, but when yu sell it. Many people sell the property (or want to).. so you have to pay the tax. It effectively defers the inheritance tax payable. 

 

It is better than the UK though, where death taxes are payable on property recived > GBP 250K per person and the taxes payablke on inherited pensions can be up to an effective 80%.  I am setting up our property (which is diminished with this house) such that it is owned by an Aussie company,, and the kids can derive rental income so as not to ave to sell it. They can then use the equity to fund hopefukly fund further investment/growth.It is about the most tax efficient way of doing it..

[nomadpete]

6 hours ago, pmccarthy said:

Some things they track.

Speaking of things 'they' track:-

 

Yesterday I received  a text to my phone and an email. The AEC sent me this:-

 

"Dear xxxx,

The Australian Electoral Commission is contacting you because we have information indicating you need to check your enrolment. Either you are not enrolled to vote, or your enrolment details may be out of date. This might be because you have changed your name or address.

The great majority of eligible people in your local area are enrolled to vote..........

Remember that enrolment and voting are compulsory by law."

 

The important thing to remember is the phrase 'we have information indicating you...' 

 

They probably know I recently sold a bit of land. Or maybe they received information that I booked my car onto the Spirit of Tasmania to return to the mainland?

 

For those of you who think 'big bro is watching you',  you better believe he IS!

[facthunter]

Move to Australia before it's too Late.  Nev

[facthunter]

You are in Queensland, aren't you? You know it's different.  Nev

[octave]

59 minutes ago, Jerry_Atrick said:

you don't pay inheritance tax on receiving the property, but when yu sell it.

I beleive you can avoid any tax,if you sell it within 2 years and under some circumstances this period may be able to be extended.

 

 

Edited 8 hours ago by octave

[Marty_d]

7 hours ago, Jerry_Atrick said:

 howeve,... recived... payablke...  hopefukly 

He's back!

I especially liked the last one. It's what's in the mind of many young blokes (and women) in the nightclub...