Year end tax strategies

One oft-quoted 'golden rule' of investing is buy low, sell high. But rules, even golden ones, are made to be broken, particularly when it comes to offsetting the impact of CGT.

In fact, selling off the weakest of your investment holdings at a loss may become critical if you've sold, or are planning to sell, a profitable asset this financial year.

By selling a poorly performing investment before 30 June, you can use the capital loss to your advantage. This is because the loss can be offset against your capital gain(s) when you complete your tax return, thereby reducing your CGT bill.

What's more, you can then use the money received from the poorly performing investment to pursue potentially more profitable investment opportunities.

Another smart strategy for managing CGT applies if you've purchased an investment (such as shares) in several parcels at different prices. Here, it's worth remembering that you don't have to sell the first parcel you purchased. Selecting the right parcels to sell at the right time can also help you minimise your CGT liability.

For more ideas on how to manage CGT effectively across your entire portfolio, speak to one of our advisers.

If you're likely to make a capital gain on the sale of an asset this financial year, you may want to contribute the sale proceeds into super and claim some of your contribution as a tax deduction.

By doing this, you can take advantage of the low tax rate payable on investment earnings in a super fund.

You can also use the tax deduction to offset some, or all, of your taxable capital gain and reduce, or eliminate, your tax liability.

To be eligible to claim your super contributions as a tax deduction, you'll generally need to be self-employed or not employed and meet certain other conditions.

However, while this is one way to reduce your CGT liability, you'll need to be mindful of the concessional super contribution caps.