Charter - Considered Effects of Capital Gains Tax

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Considered Effects of Capital Gains Tax

Capital Gains Tax (CGT), for example, can be an enormous burden on your estate. Each year Australians spend thousands of dollars on GST.

Consider the facts:

in 1995/96, 369,189 individuals paid a total of $709,000,000 Taxation Statistics 1995-1996, Australian Taxation Office 1998. in CGT;
between 1990/91 and 1995/96, $2,617,000,000 was paid in CGT by individuals Taxation Statistics 1995-1996, Australian Taxation Office 1998..

If your intention is to treat all your beneficiaries equally, there are a number of issues you need to determine:

what assets are you leaving each beneficiary?;
what is the CGT status of each asset?; and
what is the real value of the asset after CGT?

When you leave an asset to another person upon your death, the asset may be subject to CGT when the beneficiary disposes of it. That’s why it is important to make sure that there is sufficient capital available to beneficiaries to cover CGT. If the CGT liabilities are not taken into consideration, your beneficiaries may need to split up property or compensate for the depreciation of certain assets, watering down their entitlements.

In other words, without adequate estate planning, your beneficiaries may find much of their inheritance vanishes due to CGT.

Charter Financial Planning Limited ABN 35 002 976 294 AFS License No. 234665
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