Will this trigger a CGT event for my SMSF?

H

hunchy

New Member
I have a good chunk of my SMSF assets with Perth Mint's PMDS, all in unallocated. Over the last few months my target holdings GSR has dropped below where I want it to be, but I'm a bit nervous that a swap of some unallocated silver for some unallocated gold, to balance things up, will result in a CGT liability. And if that happens, I assume 50% of my swapped silver gains over the last year (actually, a bit less than a year) will go to the ATO.

Am I reading this correctly? My accountant doesn't know squat about PMs, which is a worry (but expected, there's no commission in PMs). Basically, I want to know if I can move gold and silver around within a single PMDS account without triggering CGT.

Can anyone please throw some light on this?

BTW background - I'm many years off retirement so if it makes sense to leave it alone, that's OK. I'm fully employed & tipping the PMDS minimum $5k in every few months, so maybe I could just put that into gold until things even up.
 
Not financial advice, but my understanding is that yes, this would be a CGT event - it's only a swap in principle, from an accounting point of view, it's the sale of one asset and the purchase of another.

I also believe that CGT in super is also only 15%, or 10% if held for more than 12 months.
 
goldpelican said:
Not financial advice, but my understanding is that yes, this would be a CGT event - it's only a swap in principle, from an accounting point of view, it's the sale of one asset and the purchase of another.

I also believe that CGT in super is also only 15%, or 10% if held for more than 12 months.
Click to expand...

So if I change my super to have different overall balance like less % weight on shares and higher % government bonds. Is that CGT event as well?
 
I am of the understanding that a valuation of the asset at the time of exchange/swap on both sides of the equation at market rates must occur to calculate a gain or loss in value for accounting purposes.
Therefore clearly indicating a CGT event
REDBACK
 
projack said:
goldpelican said:
Not financial advice, but my understanding is that yes, this would be a CGT event - it's only a swap in principle, from an accounting point of view, it's the sale of one asset and the purchase of another.

I also believe that CGT in super is also only 15%, or 10% if held for more than 12 months.
Click to expand...

So if I change my super to have different overall balance like less % weight on shares and higher % government bonds. Is that CGT event as well?
Click to expand...

Well if you are changing weightings, i.e. reduce % shares, you need to sell shares. CGT will need to be calculated and paid on any gains on these shares.
 
Redback & GP, thanks very much for your guidance. I think I'll simply address the imbalance by buying Au whenever I can make up the PMDS transaction minimum.
 
Old thread but relevant:
I do swaps within my SMSF using PMDS also (or whatever they call it now). I have completed two swaps so far, Silver to Gold in 2011 and back to Silver again in 2014. My SMSF manager didnt spot the CGT event in 2011, but did in 2014, and has decided i have to pay the CGT on the original cost base, so in other words, I have not got away with it. I would like to argue that CGT is not applicable but they already told me they asked the ATO, who advise its applicable.

The only case we could probably argue is that the PMDS account is the asset in itself, and the items transacted within are not realised gains/losses until we withdraw the money from the PMDS, becuase it would appear to me that is why my SMSF manager overlooked the initial swap in
Thoughts?

I contacted my personal accountant, and referred to the bookmaker case that is often raised in PM swap/sales discussions
http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/AATA/1987/255.html
and he said "the case that you rely on to claim that the sale of your bullion does not attract CGT is pre the introduction of CGT in September 1985 and is therefore irrelevant"
 
Could the same logic then not be applied to stocks in a trading account? Nice try, I'm no tax expert but I don't like your odds.
 
I know what you are saying
i forgot to mention that there is also some rule that selling/buying in the same asset class doesn't trigger a CGT event.
 
Most super funds have capital allocation options like conservative, growth, balanced, and many others. I changed once or twice without CGT event.
 
projack said:
Most super funds have capital allocation options like conservative, growth, balanced, and many others. I changed once or twice without CGT event.
Click to expand...

yeah thats my line of thinking too. I guess there has to be a definition somewhere that makes such a thing that you have as not triggering a CGT event when you change the investments within it.
 
You must log in or register to reply here.
Back
Top