A prominent accounting consultant has acknowledged that capital gains tax relief issues “continue to confuse and bamboozle” financial advisers.
Darren Wynen, chief executive of taxation consultancy firm Insyt, addressed advisers in a session called “Understanding the CGT Relief” at the SMSF Association National Conference. He conceded that elements of the regulation are difficult to understand.
“CGT relief… probably one of the simpler reforms introduced last year, would you agree?” he joked, before answering his own question: “No, not really.”
“I’ve now written two books on this,” he continued, “and I still don’t understand it.”
He explained that a methodical and step-by-step procedure is the only way to tackle the regulation.
“Start off by reviewing clients for eligibility, and then determine whether they should apply for relief,” he explained. “You need to employ an asset-by-asset approach, and work out which ones to apply the relief to.”
While eligibility is determined largely by the retirement phase that clients are in, and asset choice will be guided by CGT gains and losses, the water gets murkier when determining whether assets are to be segregated or proportionate, Wynen said, “because relief operates differently for segregated and unsegregated funds”.
Ultimately, he said, advisers need to be careful about to whom they apply the regulation, and why.
“CGT relief is not aimed at being a blanket concession,” Wynen said.
