Hi, I am looking for a calculator that can show comparisons between housing crypto (or any capital gain asset) in a company compared to personal possession. Lets say I have $5M worth of crypto and I stake it for 30 years @5% interest then sell it. Having it in a company means I pay a 30% flat tax which enables me to reinvest more of the profits and grow the profits faster, compared to owning in my personal name which means I pay a higher personal tax rate, however once the assets are sold I get the 50% CGT discount if held in my personal name. Ideally the calculator would factor in expenses and would allow you to add additional investments that would be purchased along the way with the profits earned (i.e 50% of profits gets reinvested in to real-estate, ETFs etc and the other 25% is taken as income) Dollar amounts and percentages would need to be adjustable in the calculator. Any help would be appreciated.
Capital gain assets in company VS personal name
Comments
No lol im trying to figure something out and this is the best example i can give
It's a bad example, Crypto has no profit only capital gains.
The 5% staking income in this example is presumably the profit they are referring to
Don't forget to factor in the expenses for company formation and annual reporting etc.
a spreadsheet would do it.
also not tax advice (talk to an accountant) but as another option you could hold the assets in a trust with an individual/individuals as beneficiaries as well as a company (corporate beneficiary). The company could also be assigned as a trustee if need be. The trust can then stream the capital gain income to any of the beneficiaries as needed.
isnt this just a compound interest calculator, you set the compound interest rates differently allowing for differential tax rates. 5% pa less 30% tax = 3.5%, then you invest 3%, so your compound interest rate is 3%. 5% less 49% tax = 2.5% and you invest 2% so the compound rate is 2%
for capital gains there is no tax as the gains accrue, only when you sell, so you just do 30 years at the assumed capital gain rate, then you take off tax
keep in mind that if you sell in 30 years, you may well not be working and can structure it so you receive little income that year. So you get CGT concession (assuming its still around) at a low marginal rate
You can build all this in a spreadsheet fairly easily since its just a compound interest formula. Or use one of the many calculators on line
what id you stop working, and hold assets in company. that would suck.
why sell it
put in a trust as above, plus asset protectionbut if you have sfa and not actually 5 million why bother
Just do it personally unless there is significant $$$ involved. Not worth the time and complexity of having a company.
If there is significant money involved, go talk to an accountant/financial advisor.
Just a reminder, capital losses can only be offset by capital gains (not wages, interest, dividends etc).
Ask Rekt(rading).
They put all their salary into crypto. Deposited it somewhere. Got 1% interest margin loan. As value keeps on going up they take more money out and never have to pay CGT. Never pay any tax. When they die their estate deals with the mess. Obviously worked because they have disappeared from OzB. They are on OzBallers forum now.
TL;DR
OP is trying to pretend they made mint in crypto instead of losing.
It's probably because they are invested in it and want the not a pyramid scheme to go up so they can get out.A small company (<50m in turnover per year) is subject to a 25% tax rate.
If 80% or more of company's assessable income are passive income, i.e. dividend or capital gains, then 30% company tax rate still applies even for a small company. Company created to park crypto fund — likely to be the case here.
Thank you for the replys, I am going the trust route, the only issue with a company as the beneficiary is it cant be owned by the same trust. The issue with this is I will be the shareholder and thus assets in this company wont have the protection of the trust, so i will need to set up a second trust with a company owned by that second trust this way i can choose whether to distribute directly to individual beneficiaries or the company in the 2nd trust, this way the crypto gets the capital gains discount if ever sold and i have the flexibility of distributions going to either beneficiaries or a company. I will let a professional decide what is best depending on the investment.
deme, you figured me out! your a genius! Im actually broke, just like pretending im rich.
you have a corporate trustee (of which you are the shareholder and sole director) that holds the investments on behalf of trust #1. Beneficiaries include you, your relatives and beneficiary company #1
the same corporate trustee is the trustee of trust #2, which owns the shares in beneficiary company #1
you need to be careful about Div 7A loans and circularity, but if you distribute the income each year (as in, physically move it from trust #1 to company #1 bank accounts), you will be fine.
all this stuff is a very common structure and any accountant can help you out
Yes I would physically be moving it.
stake it for 30 years @5% interest
You think any current crypto staking model has a 30 year 5% pa guaranteed return…
Thats some quality crypto understanding :)I would not stake currently, global regulations are in the works now, I have reason to believe once these regulations come into effect banks will be offering custodial services!
dammit I almost choaked on my drink
I have parked $100,000 worth of DOT in my company (its a loss making bottle shop) and its about to hit the CGT concession next month and I have staked it on Kraken.
However reading through some of the comments: Isn't staking rewards taxable event as soon as they are paid and must be declared similar way stocks are with DRP?
You already have $5m in crypto in your own name?