Easy strategies for minimising capital gains tax liabilities

It is not payable until you dispose of the asset and provided you have kept it for at least a year you get a 50 per cent discount to allow for inflation.

Furthermore, death does not trigger CGT, it merely passes the liability to the beneficiaries who receive the asset. They will pay CGT only when they dispose of it.

In fact, the only real catch is that realised capital losses die when you die, so if you have any capital losses, it's a good strategy to sell some assets that have a capital gain prior to death, to offset the losses and reduce the tax payable.

CGT is relatively easy to minimise with some careful planning.

Let's look at a perfect case study, which involves the strategy of getting a tax deduction by making tax deductible (concessional) contributions (CCs) to super.

Bear in mind that the cap on concessional contributions is rising from $27,500 a year to $30,000 a year on July 1.

CASE STUDY Jack and Jill have $800,000 and $300,000 in super respectively.

They are both aged 66, and have been retired for five years. They wish to sell a property that will carry a capital gain of around $600,000.

The first step is to defer signing any contract until after June 30, when the personal tax rates drop. Then they discover they can make use of catch-up CCs, as they have made no CCs since they retired.

You can make CCs until age 75, but if you want to claim a tax deduction for these contributions between ages 67 and 75, you must pass the work test, which only involves working at least 40 hours over 30 consecutive days. That's an easy one. To use catch-up CCs their balances must be under $500,000 at June 30, 2024.

To become eligible, Jack withdraws $360,000 from his super before June 30, which reduces the balance to $440,000 at June 30, 2024. They are now both eligible to make catch-up concessional contributions from July 1, 2024.

From July 1, the maximum period for unused CCs is the five financial years from 2019-20 to 2023-24. As Jack and Jill have not used any of the CC cap in those five years, the maximum catch-up CC is actually $132,500. This is in addition to the 2024-25 financial year's standard $30,000 CC cap. This gives them the potential to make personal super CCs totalling $162,500 each, and claim them as a tax deduction. Just be aware that in any year, you first use up the standard CC cap for the year, and only then can use your catch-up CCs.

In the 2024-25 year they sell the property, which they bought in 2018 for $700,000, for $1.3 million. This creates a taxable capital gain of $600,000, which will be taxed as $300,000 each because the property is owned in joint names. The 50 per cent discount applies, so only $150,000 will be added to each person 's taxable income in the current financial year. But in fact, the taxable gain of $150,000 each is wiped out using their standard CC caps of $30,000 for the year, and $120,000 of catch-up CCs. The total tax to pay is just $45,000, which is the 15 per cent contribution tax.

Now I appreciate that not everybody has access to catch-up CCs, but almost everybody who is retired could reduce CGT by making a $30,000 concessional contribution for the year ending June 30, 2025.

As always, take advice for your personal circumstances -good advice doesn't cost, it saves.

I am 83 retired and single I have been living on a part age pension which has just been reduced in the March handouts, I currently have just over $600,000 in super and own my home.

Should I move my superannuation to pension mode or just takeout lump sum withdrawals as I need it. I am in a quandary as to what to do and can't find any information on benefits of one over the other.

There is no reason why you should be keeping money in the accumulation phase, where your funds are paying tax at 15 per cent from the first dollar earned, and should instead move it to the tax-free pension mode.

Once you are in pension mode you will be required to be to make minimum drawdowns which will be 7 per cent of the balance at June 30 last year, but this should not bother you as you certainly could not survive on the small pension you would be getting with that level of assets.

Just keep in mind your asset tested so as you draw your superannuation down, and your account balance drops, your age pension should increase.

You have written extensively on the potential death tax on a superannuation death benefit which is paid to your estate and then distributed to non-dependent beneficiaries.

Can you elaborate please? I was under the impression that no tax was payable by the beneficiaries if the money was distributed via the estate rather than via a binding death nomination. One of my beneficiaries will be my (currently) 10-year-old grandson.

. The death tax is payable on the taxable portion of your superannuation paid to a non-dependent whether it's by direct bequest or through the estate. The only difference is it's 15 per cent plus Medicare levy of 2 per cent if left via a direct bequest, and 15 per cent if paid through the estate. I have said repeatedly a better strategy is to nip this in the bud before the problem occurs and withdraw all your money from superannuation before death occurs. It can then be received tax-free and distributed by your will as you wish.