Capital gains tax and GESB: Why timing matters

(This article was first published in The West Australian, YourMoney, on 7 July 2025)

Capital gains tax (CGT) is one of those areas where smart timing and strategic advice can make a massive difference, especially for members of GESB’s West State Super (WSS).

If you’re a GESB member with an investment property, shares or other investment assets, managing how and when you realise capital gains can have a significant impact on the final tax bill.

Let’s take a look at a practical example.

The opportunity most miss

Take Phil, a Perth teacher earning $130,000 a year. He’s got a West State Super balance of $700,000 and is considering selling a rental property he’s had for a number of years.  With recent growth in the property market he’s anticipating a $200,000 capital gain.

If you hold an investment asset for more than 12 months, there is a 50% discount on assessable CGT, so $100,000 of this gain will be taxed on top of Phil’s salary.

If Phil sells in June, right at the end of the financial year, there’s not much we can do to reduce his taxable income using his GESB fund.  In this case, the gain gets added to his salary and he’ll end up paying tax at this marginal rate, a fair chunk of which will be put into the top rate of 47% including Medicare levy.

But if Phil sells in July, the very start of the new financial year, everything changes.

How to reduce the tax bill with salary sacrifice

West State Super doesn’t operate under the usual $30,000 concessional contribution cap. Instead, it has a lifetime untaxed plan cap, currently at $1.865 million and indexed annually, which means members can salary sacrifice up to the remainder of their lifetime limit, not annual limit, in a single year.

By selling in July and then salary sacrificing his entire salary ($130,000), Phil can:

1. Offset the $100,000 capital gain by redirecting his entire salary to super, taxed at 15% rather than his marginal rates
2. Live off the property sale proceeds for the year
3. Save approximately to $32,000 in tax.

The later in the year Phil sells the property, the less time he has to offset the gain with a salary sacrifice. For example selling in January rather than July means he can only access half the salary sacrifice opportunity.

Why selling in June will cost Phil

Here’s the kicker:

The difference? Simply timing the transaction and having a plan in place before the gain is realised.

Key considerations for GESB members

1. WSS members don’t have an annual concessional contributions cap like most Australians, they have a lifetime cap.
2. Capital gains from personally owned assets (after discount) are taxed at marginal rates.
3. Timing the sale at the start of the financial year gives you the entire year to reduce income via salary sacrifice.
4. Many GESB members with investments are missing out on this strategy simply because they don’t get proactive advice.
5. Remember that the date of sale will be the date the Offer and Acceptance for is signed, not the date it settles.  If your property settles in July, but you signed the contract in June, then it will be too late to use this opportunity.

The takeaway

If you’re a GESB member considering selling an asset that may trigger a capital gain, timing is everything. Don’t wait until after the fact, speak with an adviser before you sell. And for the accountants reading this article, it’s important to cross check your records for all those State Government employees who own investments, and communicate to them why it is vital they speak to a suitably qualified adviser before they decide to sell.

This is one of the most powerful and underutilised strategies available to WSS members.

With the right strategy and timing, you could retain tens of thousands more of your wealth.

Raymond Pecotic is the Managing Director of Empire Financial Group.