# Calculating CGT - for shares bought at different time



## Prospector (20 June 2006)

Visual and I are having a discussion re the sale of shares for parcels bought at different times, and the calculation of CGT.

My understanding is that it is up to the Investor to nominate which parcel of shares are sold, according to their financial situation.

eg You may choose to sell the first bought shares if held longer to take advnatge of the possible 50% reduction in CGT,  or maybe the first bought shares were the most expensive so you want to increase the CGT in an otherwise low CGT year, or increase the CGT loss in an otherwise high year etc etc.

My software (portfolio planner) asks me to nominate whether I want to minimise/maximise CGT when I enter my sell trades.  Usually for me it is the former.

Visual has the understanding from both her online trader (which always sells the oldest shares) and her accountant that you cant nominate which parcel is sold.

Now, maybe I am having a blonde moment but surely it is the Investors decision, and not the ATO to decide which are sold first?


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## bullmarket (20 June 2006)

Hi Mrs Prospector 

My understanding is that you can nominate which parcel of shares you are selling but you must keep very accurate records to support your selctions in case you are audited by the ATO.

I'm sure there would be information on this issue on the ATO website 

cheers

bullmarket


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## Prospector (20 June 2006)

Hi Mr B
I had a quick look at the ATO site last night, but there was only the usual blab about "you must notify us of any sales of assets post 1985" kind of info that everyone knows, with none of the nitty gritty info.

I am curious though, as to what kind of additional records that you would need to keep to support your selections - if you can nominate which shares you sell, then what would be the additional info that you would need to document (other than the usual 'bought on 23/11/2005 for $25 plus brokerage plus GST and sold on 30/11/2006 for $35 plus brokerage plus GST' kind of stuff?  

Also, do you know of anyone who has been audited?  We were audited once by Workcover because we hire contractors for whom we dont provide workcover (ie they are not employees) - what a waste of time - he took 5 minutes to check all our invoices and left!


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## 123enen (20 June 2006)

Here you go.
http://www.ato.gov.au/corporate/content.asp?doc=/content/mr9602.htm


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## bullmarket (20 June 2006)

Hi Mrs P.



			
				Prospector said:
			
		

> Hi Mr B
> .............I am curious though, as to what kind of additional records that you would need to keep to support your selections - if you can nominate which shares you sell, then what would be the additional info that you would need to document (other than the usual 'bought on 23/11/2005 for $25 plus brokerage plus GST and sold on 30/11/2006 for $35 plus brokerage plus GST' kind of stuff?  ..........................




I think as long as you can account for when you bought each parcel of shares that you actually sell then you should be ok.

eg.....if you bought 10000 shares in XYZ on Jan 2 and say another 15000 shares in XYZ on May 1, then you could nominate the sale of 5000 shares on June 30 to have come from say the parcel of 10000 shares bought on Jan 2 if that suited you better than to say they came from the 15000 shares bought on May 1.

So if you nominated the 5000 shares sold on June 30 to have come from the 10000 shares parcel then you would have to document that somewhere (say in a spreadsheet or whatever) and so record that you only have 5000 shares left in the original 10000 share parcel from Jan 2.

Whatever you do, make sure your records can accurately reconcile any shares sold to a parcel of shares you bought previously without doubling up on any parcels.

But at the end of the day, what you can and can't do might also depend on your financial set up....ie....are the shares bought/sold in a super fund, trust or whatever......the above is just a general guide line based on my understanding and experience........see your own tax adviser or contact the ATO directly if you have any doubts about your particular circumstances.

hope this helps

bullmarket


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