Value of shares for taxation

Iggy_Pop · 11 July 2009

I have bought and sold CBA shares at a variety of prices, and still hold a quantity (in case there is another capital raising) Does anyone know how I should value the shares still held, as prices paid have been $46, $35 and $26 the the DRP prices and selling price being $30 and $36. The value of the shares held will determine the captital gain/loss I end up with and not sure if it would be the last share price purchase or the average share price??

Julia · 11 July 2009

Iggy_Pop said:
I have bought and sold CBA shares at a variety of prices, and still hold a quantity (in case there is another capital raising) Does anyone know how I should value the shares still held, as prices paid have been $46, $35 and $26 the the DRP prices and selling price being $30 and $36. The value of the shares held will determine the captital gain/loss I end up with and not sure if it would be the last share price purchase or the average share price??

No, you don't calculate it that way.

Each parcel is treated separately.

You don't say if you've sold parcels of equivalent number of shares to those purchased, but I'd assume you have.

You can choose which buy parcel to use to calculate the loss, in order to give yourself the greatest tax advantage.

(Remember the 50% discount if you've held more than 12 months.)

The ATO website has a section going into this in detail, I think.

Iggy_Pop · 11 July 2009

I have bought and sold different quantities of shares and had a few added with DRP at a different price again. From what you indicating, the shares I currently hold can be valued at the lowest price I paid ($26) giving me a profit?

Julia · 11 July 2009

Iggy_Pop said:
I have bought and sold different quantities of shares and had a few added with DRP at a different price again. From what you indicating, the shares I currently hold can be valued at the lowest price I paid ($26) giving me a profit?

No, I didn't say that. The shares you presently hold are valued at whatever the market value is when you do the calculation. You can't just choose a value to place on them.

I don't know how you'll easily work out your capital gains/losses if you've sold disparate numbers of shares.

Why wouldn't you just sell a parcel that matches a parcel you bought?
Then the calculation of the CGT or loss is simple.

Iggy_Pop · 11 July 2009

I bought quantities of shares based on when I thought they were well priced and how much spare money I had at the time, and sold when either it made sense to or I wanted some captial for something else. The attached file indicates the transactions. Can anyone help??

bellenuit · 12 July 2009

Iggy_Pop said:
I bought quantities of shares based on when I thought they were well priced and how much spare money I had at the time, and sold when either it made sense to or I wanted some captial for something else. The attached file indicates the transactions. Can anyone help??

You won't have to worry about the 50% capital gains discount as the only shares you have held for a year are the first lot bought, which are priced higher than any you have sold, thus no gain to begin with.

Just match the sales against purchases that occurred before the sale.

So you could say the 110 sold on 18/2/09 @ $29.50 consisted of 39 bought at $26.47, 43 @ $35.03 and 28 @ $47.81. This will be a capital loss that you can apply against other capital gains. This also leaves 22 @ $47.81 left over from the first batch you bought.

For the 113 sold on 9/4/09 @ $36, you just pick from the remaining batches those you want to declare as being sold. So you might say that the 113, consisted of the remaining 22 @47.81 from the first batch bought and 91 of the 136 bought under the spp @ $26. The ones you chose are up to you and will depend on whether you want to end up with a capital gain or loss.

If you use the example from the last paragraph, you will have 5 @ $28.45 and 45 @ $26 left over for future sales.

BTW, your end balance should be 50, not 51.

Make sure to reduce sale proceeds by any selling costs and increase buy costs by any buying costs.

skc · 12 July 2009

bellenuit said:
You won't have to worry about the 50% capital gains discount as the only shares you have held for a year are the first lot bought, which are priced higher than any you have sold, thus no gain to begin with.

Just match the sales against purchases that occurred before the sale.

So you could say the 110 sold on 18/2/09 @ $29.50 consisted of 39 bought at $26.47, 43 @ $35.03 and 28 @ $47.81. This will be a capital loss that you can apply against other capital gains. This also leaves 22 @ $47.81 left over from the first batch you bought.

For the 113 sold on 9/4/09 @ $36, you just pick from the remaining batches those you want to declare as being sold. So you might say that the 113, consisted of the remaining 22 @47.81 from the first batch bought and 91 of the 136 bought under the spp @ $26. The ones you chose are up to you and will depend on whether you want to end up with a capital gain or loss.

If you use the example from the last paragraph, you will have 5 @ $28.45 and 45 @ $26 left over for future sales.

BTW, your end balance should be 50, not 51.

Make sure to reduce sale proceeds by any selling costs and increase buy costs by any buying costs.

In simpler terms, it's called FIFO (First in first out). This way you always assume that the oldest shares are sold first.

bellenuit · 12 July 2009

skc said:
In simpler terms, it's called FIFO (First in first out). This way you always assume that the oldest shares are sold first.

It's simpler, but not a requirement if you keep the proper records. You can chose the sale order to maximise the tax advantage to you. Not using the above as an example, there can be an advantage to keeping the older shares as they are more likely to offer the opportunity of the 50% CGT discount when held for 1Y+.

airpoe · 12 July 2009

bellenuit said:
It's simpler, but not a requirement if you keep the proper records. You can chose the sale order to maximise the tax advantage to you. Not using the above as an example, there can be an advantage to keeping the older shares as they are more likely to offer the opportunity of the 50% CGT discount when held for 1Y+.

I agree, the people who don't buy all & sell all in one go should not use FIFO method unless they are lazy or too rich to care!!

Iggy_Pop · 12 July 2009

Thanks for clearing up how it works. Just have to sort out whether I want maximum profit or loss, as I have had a few other stop loss triggers and associated loss.

Julia · 12 July 2009

Iggy_Pop said:
Thanks for clearing up how it works. Just have to sort out whether I want maximum profit or loss, as I have had a few other stop loss triggers and associated loss.

I suppose you know you can carry losses forward to following years?

Iggy_Pop · 12 July 2009

Yes, aware of being able to carry forward losses

Bullock · 14 July 2009

Hi All

what date do you start counting the year from to get the 50% capital gains exemption? Is it the trade date or the settlement date ?Also when participating in a rights issue or share purchase plan does the year start from the allotment date?

Thanks

So_Cynical · 14 July 2009

Bullock said:
Hi All

what date do you start counting the year from to get the 50% capital gains exemption? Is it the trade date or the settlement date ?Also when participating in a rights issue or share purchase plan does the year start from the allotment date?

Thanks

I'm using the pay/settlement date...cos that's when i got/payed the money...ive no idea if this is right. :dunno:

bellenuit · 14 July 2009

So_Cynical said:
I'm using the pay/settlement date...cos that's when i got/payed the money...ive no idea if this is right. :dunno:

No, its the other one. You use the trade date.

Also, I think I read somewhere that its the anniversary +1 day.

E.G. Buy 25-april-08 then to get discount, you cannot sell until 26-April-09.

Yes, for DPPs and other share plans, you use the allotment date.

Krusty the Klown · 15 July 2009

bellenuit said:
No, its the other one. You use the trade date.

That's right, its the day you enter in to the contract to buy.

Also, I think I read somewhere that its the anniversary +1 day.

E.G. Buy 25-april-08 then to get discount, you cannot sell until 26-April-09.

Yes, for DPPs and other share plans, you use the allotment date.

Also correct.

nathanblack · 16 July 2009

Can someone work out his average buy price? jono perhaps?

beamstas · 16 July 2009

You can use any method you want, to mimize/maximise gains

Example

Buy 1000 XYZ $1 each
Buy 1000 XYZ $2 each
Buy 1000 XYZ $3 each

Sell 2000 XYZ 3 months later

You can either sell the first $1000 worth and the $2000 worth, so cost base is $3000.

Or you can sell the last $3000 worth and the $2000 worth, so cost base is $5000.

You can do it however you want, but remember you can only sell each share once, so keep accurate records.

beerwm · 16 July 2009

nathanblack said:
Can someone work out his average buy price? jono perhaps?

haha, too funny.

:

------

so I take it you can use any method,

FIFO, [first in...]
LIFO, [last in...]
Weighted Average.

-but does it need to be consistant through all purchases?
--or can you change it individually to suite your need [given different stocks]?

beamstas · 16 July 2009

beerwm said:
haha, too funny. :

------

so I take it you can use any method,

FIFO, [first in...]
LIFO, [last in...]
Weighted Average.

-but does it need to be consistant through all purchases?
--or can you change it individually to suite your need [given different stocks]?

Whatever you want any time
So long as each share is sold once only

Value of shares for taxation

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