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Shares:$'s that are mine after cap n income

Discussion in 'General Investing Discussion' started by Venidici, 15th Oct, 2010.

  1. Venidici

    Venidici New Member

    Joined:
    15th Oct, 2010
    Posts:
    3
    Location:
    WA
    Hi everyone! Id like to keep this is as simple as can :_)

    For the purpose of illustration(example, hypothetical):

    Im an individual(for tax reasons). I sell one bundle of shares ive owned for MORE than 5 years and after sale i get $880,000 deposited into my account. I had used $80,000 to purchase the shares.

    After ALL taxes( I think the only deuctions are CGT and Income Tax) paid (this being my ONLY income for the year) can someone give me, FIRST, the amount am i left with and then if you are able to explain how all the tax components work.

    I talked to ATO, no luck...they just TELL you stuff soooo quickly and my accountant is soooo busy ATM he hasnt got back to me yet. He is a great Acc tho :_)

    Thanks for any help you guys/gals can help with :_)

    What is the amount that is all mine after everything, please?
     
  2. jm_928

    jm_928 New Member

    Joined:
    2nd Jun, 2006
    Posts:
    4
    Location:
    Adelaide, SA
    Assuming that you purchased the shares for $80k & sold for $880k
    Gross Profit = $800k
    Note that you could deduct any costs for buying/selling from this profit (e.g. brokerage).

    Since you would have held the shares for over 1 year, a 50% reduction for CGT applies.

    Hence your taxable income would be $400k.

    Based on the ATO calculator at Comprehensive tax calculator for the current financial year, and assuming no other income, deductions, allowances and you holding private health insurance

    Tax payable = $154,850.00
    Medicare levy = $6,000.00

    Amount left after tax = $880,000-$154,850-$6000 = $719,150
     
  3. Venidici

    Venidici New Member

    Joined:
    15th Oct, 2010
    Posts:
    3
    Location:
    WA
    Thanks jm_928 for your patience and time. Please dont get upset with me as i try to break it down further :_)

    OK, so, i now have $400K on my tax form.

    1). On the $400K do i pay CGT AND Income Tax?
    2). Are they now called the same thing?
    3). Isnt the tax rate at this high tax bracket 46.5%(i think it is-if i rem it properly from the ATO guy)?
    4). Does the 46.5% tax rate include the medicare levy?

    I did try your calculator and see the final figure is the same as yours( thanks for your time again) so are my questions above relevant still?
     
  4. jm_928

    jm_928 New Member

    Joined:
    2nd Jun, 2006
    Posts:
    4
    Location:
    Adelaide, SA
    Hi Venidici,

    I must warn you that I am not an accountant, so the following are just my understanding.


    You just pay one lot of tax - income and capital gains are both combined and tax is payable on the total. In the case of capital gains there is a 50% discount if you hold the asset for more than 12 months.

    If for example you had earned $100K from your job during the year, you would have to pay tax on $500k ($800k*50%+100k).

    The tax rate varies based on your total income, so you can't calculate capital gains tax and income tax separately.

    The tax rate varies based on total income is described in Individual income tax rates.

    So the first $6000 has no tax, between $6000 and $35000 its 15% etc. Any amount above $180000 is taxed at 45%. There is also a 1.5% levy for medicare on top of this - thats where the 46.5% comes from.

    Hope this helps.
     
  5. Venidici

    Venidici New Member

    Joined:
    15th Oct, 2010
    Posts:
    3
    Location:
    WA
    Thanks once again, jm_928, you have been a huge help. Im grateful for you taking the time to help out :_)