CGT on shares held less than 12 months

[paguatao]

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?

 

[Sunfish]

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

 

[Humphrey]

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?

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

 

[paguatao]

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 ....???

 

[Humphrey]

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

 

[fmx_rider]

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.

 

[GreatPig]

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

 

[Pushka]

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.

 

[Sunfish]

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.

 

[Humphrey]

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.

Not very likely at all.

 

[Pushka]

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!

 

[Rob G.]

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

 

[The Fence]

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!

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

Cheers up Mate !

 

[Sunfish]

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

Cheers up Mate !

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.

 

[plusnq]

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

http://www.ato.gov.au/individuals/c...001/002/026/017/009&mnu=5060&mfp=001&st=&cy=1

Cheers

Shane