Offset capital gains tax with deductible super contributions

Capital gains tax (CGT) is payable on the proceeds of the sale of an asset. This is calculated after any losses have been taken into account, and after any discount if applicable (if you've held the asset for 12 months or more you will qualify for a 50% discount). You may be able to make a tax deduction for the amount of CGT you are liable for, if you use the proceeds of your investment to contribute to your super.

The following is an example of where this might be appropriate:

Tom (age 50) is self-employed and has recently sold some shares he has owned for three years. The proceeds of the sale are $50,000, but due to the 50% CGT concession, only $25,000 will be assessable at his marginal rate of tax. If Tom contributes $25,000 of the $50,000 sale proceed into super, he can claim a tax deduction. This will mean that rather than being assessed at his marginal tax rate which could be up to 46.5% (including medicare levy), the contribution will instead be subject to 15% contributions tax, which could amount to a significant tax saving.