Most people accept that one of the realities of life is paying taxes. In Australia, you’re paying taxes before you get home from the delivery suite at the hospital. Mum and dad driving you home? That’s tax on the fuel that you’re burning. Nice cozy onesie? Yup, tax on that too!
The most obvious tax comes when you’re starting to earn money with income tax kicking in as soon as the dollars start rolling in. Earning more? That will be more tax thank you very much says Mr Taxman. So, is there an end in sight? Does everything that you make end up supporting the government?
Here are a short list of some of the things that you may (or may not) know that should you profit from, you may not actually have to pay tax on. Now that’s a change!
- Pre 1985 assets. When the capital gains tax laws came in, they were not retrospective – so accordingly, a line in the sand was drawn and this line is 20 Sept, 1985. If you own any assets that were purchased before this date, you may not have to pay any tax on the profit.
- Your own home – if your own home has gone up in value and you sell it, there is no tax on that. Have you moved out and rented it out for a while? I certain circumstances, you still don’t have to pay any tax on it!
- Bought something for yourself, decided to get rid of it on eBay and sold it for a profit? Personal use assets up to $10,000 don’t attract CGT if you sell them for a profit. However, don’t make a habit of it – it could turn into a business in the ATO’s eyes
- Small collectibles up to the value of $500. Things like jewelery, art, coins ect might go up in value, so keep them small and you may not have to pay tax on the profits. A trap here is if you sell a collection of smaller objects, the ATO might treat them as if they’re one.
- Cars. If you actually make money on your car or motorcycle, then you don’t have to pay tax on it. With the highest depreciating cars dropping up to 77% of their value in the first 3 years, this isn’t something that most people will experience – however if you’ve got an old Ford GT sitting in the garage, if it’s time to sell it be thankful that the ATO isn’t going to ask for a little bit back.
There are exemptions to every rule, and don’t forget that if you’re doing something for the pure reason to pay less tax you may get caught out by the anti avoidance provisions in Part 4A of the tax act. As always, if you need further clarification, seek the advice of your accountant, call your financial planner or get in contact with Financial Spectrum to arrange a discussion.