CGT on shares held less than 12 months

Discussion in 'Accounting and Tax' started by paguatao, 31st Oct, 2008.

  1. paguatao

    paguatao Member

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    Hope this isn't too dumb a question .....

    From what I understand, if you hold shares for longer than 12 months, you get a 50% discount on any CGT you have to pay.

    Let's say I bought 200 shares @ $1.50 in Jan 2007 and I'm still holding them. I recently bought some more shares (100@$1.25) in October 2008. I want to make a quick profit and sell these @ $1.45 in November 2008. Because I have made a profit, and held them for less than 12 months, I have to pay CGT on full profits??

    How does ATO determine which lot of shares I sold? Can I just say I sold the Jan 2007 ones at a loss?
     
  2. Sunfish

    Sunfish Member

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    It's your choice. For more detail do a search.... it has been done regularly.
     
  3. Humphrey

    Humphrey Member

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    So you only want to sell 100 shares? Not all 300 shares?
     
  4. paguatao

    paguatao Member

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    Yep - only 100 (hypothetically..) . I did a search and found some threads, which basically say I can choose how to treat them. I guess if I want, I can treat them as a loss, to offset against gains this financial year ... also I can treat them however I like to minimise the capital gains, so if I sell for a profit, I can "sell" the Jan 2007 ones, ot qualify for 50% CGT ... whichever I end up paying the least tax on ....???
     
  5. Humphrey

    Humphrey Member

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    Yes, that's my understanding of how it works.
     
  6. fmx_rider

    fmx_rider Member

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    However, the one thing to bear in mind as far as I am aware (DOUBLE CHECK), is that you have to be consistent.

    ie. You can't sell one share on a 'last in-first out' basis and sell another on a 'first in-first out' basis just to maximise cap gains.
     
  7. GreatPig

    GreatPig Member

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    I don't believe any consistency is required. As far as I'm aware, you can choose to sell any of the shares at any time for any reason (well... almost any reason).

    GP
     
  8. Pushka

    Pushka Member

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    Yep, agree with Great Pig. It is always your choice as to which you sell first. It is usually better to realise a Capital Loss first, as each year the tax rates come down so you pay less. However, sometimes that is not the best thing to do; eg if income is going to increase then it might be better to pay the gain now.
     
  9. Sunfish

    Sunfish Member

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    What's the betting this thread carries on ad-infinitum, in spite of the fact it was a simple question and only a simple answer was required and given.
     
  10. Humphrey

    Humphrey Member

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    Not very likely at all. :D
     
  11. Pushka

    Pushka Member

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    Which answer was that Sunfish - FMX rider gave some incorrect advice about being consistent, Great Pig corrected that, and I gave further explanation on when you might realise a capital gain versus loss. It seems to me the only post that didnt add any value to the question was yours! ;) :p
     
  12. Rob G.

    Rob G. Member

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    Each share is an individual asset.

    Provided you have not aggregated all your shareholding data and have tracked each parcel, you can realise from any particular parcel, and within that you can choose an appropriate method for each individual share.

    For instance, the methods may change for some depending on whether I have some capital losses to set off as well.

    Has that added anything ?

    Cheers,

    Rob
     
  13. The Fence

    The Fence Banned

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    Boy SF...you are getting very grumpy lately...what's the matter...?

    Cheers up Mate !:)
     
  14. Sunfish

    Sunfish Member

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    It's a common question that many don't understand. It has been done many times though and I was willing to bet that it would be stuffed around again. This is the 13th post already.

    Besides, I'd rather be grumpy than some of the adjectives I use to describe some other members, who shall remain nameless. :D
     
  15. plusnq

    plusnq Member

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