# What about TAX?



## das Geld (20 July 2007)

Does anyone know how tax works when it comes to buying and selling shares? is it true that if you keep the same share for more than a year you pay much less tax rather that trading it all the time? anyone know the percentages?

cheers.


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## Julia (20 July 2007)

das Geld said:


> Does anyone know how tax works when it comes to buying and selling shares? is it true that if you keep the same share for more than a year you pay much less tax rather that trading it all the time? anyone know the percentages?
> 
> cheers.




50% less CGT after 12 months.
Re "trading it all the time" tax is not your only consideration - brokerage is also a factor.


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## questionall_42 (20 July 2007)

I am sure there are other threads on ASF that will answer your query in detail.  Do a search.  Also, check out the ATO website.

Put simply, any profits from shares are added to your personal income.  These are the "capital gains".  If you have made any losses, these are "capital losses" and can only be offset against capital gains.

I have attached a simple model that i have created to help ascertain when it is profitable (or not) to sell.

Hope it is helpful.


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## bepra1 (20 July 2007)

As for the Capital Gain Tax, how do we actually pay for CGT? Is it automatically deducted just as PAYG system? Or do we have pay manually to the ATO?


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## questionall_42 (20 July 2007)

bepra1 said:


> As for the Capital Gain Tax, how do we actually pay for CGT? Is it automatically deducted just as PAYG system? Or do we have pay manually to the ATO?




You actually pay for it when you do your tax return (or rather when the amount is due).  There are exceptions to this though - if you earn too much (is it over $2000  - which is really not a lot), then you will have to PAYG.  When I had income bearing investment (e.g. paid 9% per annum), I  had to PAYG; but since I have been playing the stockmarket, my capital gains have exceeded $2K per annum and I have not had to PAYG.

But speak to an accountant - I am just a philosopher.


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## insider (20 July 2007)

achieving the 50% cgt is a rort... just don't worry about tax


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## questionall_42 (20 July 2007)

insider said:


> achieving the 50% cgt is a rort... just don't worry about tax




Disagree - it is not a rort - it is a gift.  And if you plan well, it is a lovely bonus.  And it can add up quite quickly too.  See my little model above.  It should not be the sole reason to sell, but it should be a consideration.  Trading too much can cost heaps in tax and brokerage.  Calculate it.


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## shinobi346 (20 July 2007)

questionall_42 said:


> I am sure there are other threads on ASF that will answer your query in detail.  Do a search.  Also, check out the ATO website.
> 
> Put simply, any profits from shares are added to your personal income.  These are the "capital gains".  If you have made any losses, these are "capital losses" and can only be offset against capital gains.
> 
> ...




In your spreadsheet, shouldn't the base amount have the brokerage added on instead of subtracted, since the brokerage reduces your profits.


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## questionall_42 (20 July 2007)

shinobi346 said:


> In your spreadsheet, shouldn't the base amount have the brokerage added on instead of subtracted, since the brokerage reduces your profits.




 100% correct shinobi346.  This is clearly a demonstration in the virtue of putting things online so others can critique your analysis/model.  Stupid mistake. I have attached an amended version.  Whatever is in the blue boxes you can adjust - they are the assumptions and the driver of the model.


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## BlingBling (20 July 2007)

insider said:


> achieving the 50% cgt is a rort...




Isn't it.
Made me a happy man the day the Gov changed the tax laws regarding shares for non residents.


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## Bullion (23 July 2007)

questionall_42 said:


> If you have made any losses, these are "capital losses" and can only be offset against capital gains.
> .




Regarding this part here... Can someone please explain this a bit more? 


Say I earn $50,000/year as income from a job. 

During that year I made a total loss of $5000 in shares. 

Will I then be taxed on $45,000?


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## YELNATS (23 July 2007)

Bullion said:


> Regarding this part here... Can someone please explain this a bit more?
> 
> 
> Say I earn $50,000/year as income from a job.
> ...




I assume you mean you made $5000 in capital losses and had no capital gains in that year.

You would be taxed on $50,000. The capital loss of $5000 can only be applied against capital gains. 

As you had no capital gains in that year, you can't apply your capital losses. However, you can carry forward your capital losses to future years and apply them when and if you do have future capital gains. regards YN


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## arkady (25 July 2007)

Is there any benefit in creating a business name and trade under that business to buy and sell shares? Any tax offsets business vs individual or does it work out the same?


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## Gordon (25 July 2007)

I did a search for 'tax' and 'capital gains' but couldnt find much. Does asx send you out a group certificate like work does? because i earn $95 000 a year from my job and sold some shares and got 100% of the profit (ie i will owe some of this to the tax man). So should i wait for something like this or do i have to do it myself?

Thanks


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## tugga (25 July 2007)

does the direct shares send out a statement?

or do i have to work out what shares i bought and sold etc..........


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## SharonK (25 July 2007)

Any gains or losses made from share investing has to be included in your income tax return under the capital gains section, no you don't get any statements from the asx.

If you use Etax online its quite simple to enter in the information and it will calculate you tax liability, its free software available on the ato website, there are worksheets that you can work through. 

Share trading is treated differently to share investing though.

If your not sure always best to see an accountant.
cheers


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## Gurgler (29 July 2007)

SharonK said:


> If you use Etax online its quite simple to enter in the information and it will calculate you tax liability, its free software available on the ato website, there are worksheets that you can work through.




I've just inputted my 25 trades completed last financial year into e-tax; it took an hour or so - bearing in mind I had to get my head around the software as it's my first trading year. A little boring, but I'm offshore so the blessing is being able to do your own tax and submitting remotely.

I wonder, am I kidding myself - is it worth the trouble? Or am I doing it incorrectly?


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## tibby (31 August 2007)

What happens when you have a joint brokerage acct...can the capital gain (or loss) only be applied to one name or does any gain/loss have to be split 50/50??


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## Brengun (1 September 2007)

There is also the matter of franking credits. If you have not held the shares 'at risk' for a minimum of 45 days (not including the purchase day and sale day), you cannot claim a franking credit on that share if a dividend was paid.


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## bvbfan (1 September 2007)

Brengun said:


> There is also the matter of franking credits. If you have not held the shares 'at risk' for a minimum of 45 days (not including the purchase day and sale day), you cannot claim a franking credit on that share if a dividend was paid.




You can do it if your franking credits for the year are less than $5000.

See ATO website


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## DOC (11 September 2007)

Gurgler said:


> I've just inputted my 25 trades completed last financial year into e-tax; it took an hour or so - bearing in mind I had to get my head around the software as it's my first trading year. A little boring, but I'm offshore so the blessing is being able to do your own tax and submitting remotely.
> 
> I wonder, am I kidding myself - is it worth the trouble? Or am I doing it incorrectly?




if you have traded 25 times during the year then the ATO will probably regard you as being "in the business of" a share trader, which would mean that your gains are regarded as income gains ( from the business of share trading) and not capital gains. and you would add them on top of your normal income and pay tax on them.
So your probably better off speaking to an accountant to lodge this for you, rather than making lots of errors doing it yourself.

good luck


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## apra143 (12 September 2007)

DOC said:


> if you have traded 25 times during the year then the ATO will probably regard you as being "in the business of" a share trader, which would mean that your gains are regarded as income gains ( from the business of share trading) and not capital gains. and you would add them on top of your normal income and pay tax on them.
> So your probably better off speaking to an accountant to lodge this for you, rather than making lots of errors doing it yourself.
> 
> good luck




Hmm good to know. But a few questions:

1. Would you be able to claim brokerage as a deduction or offset?
2. How would you report capital losses, if it is your first time trading and have traded 25 times that year?


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