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Selling your home and CGT

When it comes time to sell your home, you may be wondering if you will need to pay capital gains tax (CGT).

Generally, if you live in the home you are selling you will not have to pay CGT under the main residence exemption.

The ATO considers a dwelling as your main residence if:
– you and your family live in it
– your personal belongings are in it
– it’s the address your mail is delivered to
– it’s your address on the electoral roll, and
– services such as gas and power are connected.

If the home has been used to produce assessable income such as running a business from it, renting it out or flipping it, you may not be entitled to the full main residence exemption from CGT. This means you will have to pay CGT on part of any capital gain made when your sell your home.

For those who use their home to produce income, i.e., renting out part or all of it, you can work out the capital gain that is not exempt by taking into account the following factors:
– proportion of the floor area that is set aside to produce income
– period you use it for this purpose
– whether you’re eligible for the ‘absence’ rule
– whether it was first used to produce income after 20 August 1996.

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News

Expanded super for older Australians

April 12, 2019

The 2019-20 Federal Budget has placed a strong focus on the growth of the economy whilst also having the intention to look after older Australians.

Older Australians will benefit from the work test exemption age being extended from age 64 to 66. The work test requires an individual to work at least 40 hours in any 30 day period in the financial year in order to make voluntary personal contributions.

This change in age will now allow individuals aged 65 and 66 who previously didn’t meet the work test to contribute three years of after-tax contributions in a single year, meaning up to $300,000 can be injected into an account with less than $1.6 million in super (tax-free pension threshold). This adjustment aligns with the increase for the Age Pension from 65 to 67.

Spousal contributions can now be made until age 74, up from age 65, without having to meet the work test. Under spousal contribution regulations, an individual can claim an 18% tax offset of contributions up to $3,000 made on behalf of a non-working partner. A further $3,000 can be contributed but with no tax offset.