By Doug Morris, CEO, Sharesight
As your client’s investment portfolio grows, so do their capital gains tax (CGT) obligations — often becoming increasingly complex. Navigating these obligations effectively isn’t just about compliance; it’s an opportunity to deliver strategic, value-driven advice. By streamlining CGT reporting and getting real-time access to critical tax insights, you can provide more precise, proactive guidance to your clients. Not only does this strengthen your clients’ investment strategies but it also reinforces trust and long-term loyalty — two things that are crucial in an advisory landscape that is now more competitive than ever.
How CGT impacts financial decisions
CGT is a critical factor in investment decision-making, influencing every buy, sell, or asset restructuring move. Without clear visibility into CGT liabilities, clients risk unexpected tax bills, diminished returns, and missed opportunities to optimise their tax position.
Take, for example, a client looking to rebalance a diversified portfolio. Without a precise understanding of their CGT exposure, they could unknowingly trigger a significant tax liability — undermining the very strategy designed to strengthen their financial position. By proactively managing CGT, advisers can help clients structure transactions more strategically, minimising tax burdens while keeping their investment goals on track.
The challenges of CGT tracking
One of the biggest challenges advisers face is tracking CGT across multiple asset classes, including shares, managed funds, property and other investments. Manual tracking can be time-consuming and prone to errors, especially considering factors such as:
- Cost base calculations: Adjusting for brokerage fees, reinvested distributions and corporate actions
- Holding periods: Identifying whether an asset qualifies for the CGT discount
- Loss harvesting: Strategically selling loss-making assets to offset gains
- Compliance with ATO regulations: Ensuring accurate reporting to prevent audit risks.
By using an automated portfolio tracking solution, you can consolidate CGT data in real time, allowing you to provide more precise recommendations while reducing your admin workload.
Enhancing advice with real-time CGT insights
When your clients’ CGT data is easily accessible, you can more effectively integrate tax considerations into broader wealth management strategies.
Proactive tax planning
By having access to real-time CGT insights, you can help clients time their asset sales strategically, reducing tax liabilities and maximising after-tax returns. For instance, if a client is considering selling an asset, understanding the CGT implications beforehand allows you to suggest potential strategies such as:
- Deferring the sale to the next financial year to spread the tax burden
- Using capital losses to offset gains from other assets
- Holding assets longer to qualify for the 50% CGT discount on investments held for over 12 months.
Avoiding tax surprises
Unexpected tax liabilities can erode trust in an adviser-client relationship. By keeping clients informed of their CGT position throughout the year — not just at tax time — you can ensure clients are prepared and avoid unpleasant surprises when lodging their returns.
Optimising investment strategies
CGT should be a key consideration when recommending investment structures. For example:
- Advising on tax-effective investment vehicles like SMSFs, which benefit from lower CGT rates
- Guiding clients on the benefits of holding growth assets in tax-advantaged accounts
- Recommending asset sales that align with a client’s retirement strategy to take advantage of lower tax brackets.
Strengthening client relationships through CGT transparency
Beyond just tax savings, having clear, readily available CGT data enhances the overall client experience. Clients appreciate proactive, data-driven advice that aligns with their financial goals. By effectively leveraging CGT insights, you can:
- Build trust and credibility: Demonstrating a thorough understanding of tax implications reassures clients that you’re working in their best interest
- Increase client engagement: Providing regular updates on CGT positions encourages more frequent discussions about broader financial planning
- Enhance long-term financial planning: Helping clients plan for future tax liabilities ensures their investment decisions align with their life goals.
Leveraging technology for seamless CGT reporting
To manage CGT effectively, you should consider technology solutions that automate tracking and reporting. Platforms that integrate CGT calculations with portfolio tracking simplify tax management, allowing you to generate real-time CGT reports for informed decision-making; provide clients with clear, easy-to-understand insights; and reduce manual errors and admin burden. This allows you to focus on delivering high-value strategic advice rather than getting bogged down in tax calculations.
The takeaway
Mastering CGT obligations is crucial for delivering high-impact financial advice. When CGT insights are readily available, you can provide more precise, timely guidance — helping clients avoid costly tax surprises and maximise their investment potential. This not only enhances financial outcomes but also strengthens client relationships, fostering trust and long-term loyalty.
By leveraging technology to simplify CGT reporting, you position yourself as a proactive, strategic partner in your clients’ financial success. Using a portfolio tracking software like Sharesight makes this easier by allowing you to:
- Review CGT positions for all sold investments in a client’s portfolio
- Break down capital gains into short and long term gains, along with losses
- Customise sale allocation methods at both portfolio and individual asset levels to determine the client’s optimal tax position.
Sharesight’s capital gains tax report gives you real-time tax insights at your fingertips, helping you navigate tax implications with confidence and clarity — ensuring your clients stay ahead.
Our 30-day free trial gives you access to a range of powerful tools for tax planning, performance analysis, asset allocation and more. Get started today to see how you can transform your practice and deliver smarter, data-driven advice with confidence.
This article is general information and does not consider the circumstances of any investor or constitute advice. No fund or stock mentioned in this article constitutes an offer or inducement to enter into any investment activity.
