Author Topic: Capital gains on selling a Vanguard fund from outside Australia  (Read 578 times)

BrakeForTurtles

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The day has finally come to consolidate the investments that I can. In 2012 I started investing in a Vanguard fund, just by putting in the minimum amount ($5000) and then not adding anything after that because I decided to go back to school. Now the fund has around $7500 in it, and I want to withdraw this and transfer it to my investments in Canada (where I live now). I have procrastinated doing this but now I have the paperwork filled out and ready to go.

Am I right in calculating that the capital gain from selling this fund will be 50% of $2500 (or whatever the exact difference ends up being), so I will have $1250 added to my taxable income? My Canadian income also has to be reported in Australia, so I will be over the tax-free threshold, but I should still be under the $37K tax bracket. I think this means for the first time in my life I will owe taxes for this financial year. So I should make sure I keep enough in my Australian bank account to cover that. Is there anything else I should consider before I mail my withdrawal form?

Shaz_Au

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Re: Capital gains on selling a Vanguard fund from outside Australia
« Reply #1 on: April 06, 2018, 12:49:09 AM »
Please ignore the following post, it is incorrect.  Sorry for the confusion and thanks for the correction mjr.

Hi B4T,

I believe your Capital Gain is $2500 less any expenses you incurred in making, holding and selling the investment. The 50% CGT discount for holding an investment for over 12 months would mean that the capital gain calculated above would then be taxed at half your marginal tax rate.  In your example it would be ($2500-expenses)*((19/2)/100).  Worse case you are talking $237.50 assuming you stay under in the 37,000 (19% bracket)

Does the CGT discount apply to your international status? Do you pay the Medicare Levy? I have no idea about these and I'm no tax expert but I'm sure there will be someone much more qualified to answer your question along shortly.

Cheers,
Shaz
« Last Edit: April 09, 2018, 05:34:19 PM by Shaz_Au »

mjr

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Re: Capital gains on selling a Vanguard fund from outside Australia
« Reply #2 on: April 06, 2018, 11:41:51 AM »
Incorrect.  OP is correct, the 50% discount applies to the capital gain which is then taxed at marginal rates.  The discount does not apply to the marginal rate directly.