Buying shares for a family member

[bonkerrs]

I'm about to buy some BSL shares with the entitlement scheme, to the amount I'm entitled to. On top of that you can apply for more then your entitlement.

A family member wants me to apply for the extra shares. If I apply for and get 3225 shares on top of the entitlement and he wants to sell it later at a profit. I will then sell that amount of my shares (or his shares).

Where I need some help. I'm concerned about getting the costs right I will sell then transfer the money to him but less the cost of doing it all, ie. brokerage and future tax. Is this a fixed rate? And I read somewhere here 1.5% Medicare levy for CGT.

I'm keen to help him out but don't want to do it if I can't work out exactly the costs. I don't anyone to end up in the red. I hope that makes sense!

Has anyone else been in a similar situation? If so, how did you do it?

 

[clayton4115]

i am not sure if you are talking about CGT (costs) but yes if he sells the shares at a profit within 12 months he will have to pay tax at his marginal tax rate (depending on what other income he earns) most ppl fall in the 30% tax bracket, so he would have to pay 30% + 1.50% Medicare on any gains he makes within 12 months of selling BSL.

 

[bonkerrs]

i am not sure if you are talking about CGT (costs) but yes if he sells the shares at a profit within 12 months he will have to pay tax at his marginal tax rate (depending on what other income he earns) most ppl fall in the 30% tax bracket, so he would have to pay 30% + 1.50% Medicare on any gains he makes within 12 months of selling BSL.

Thanks for the reply Clayton. But this is where it gets confusing (for me anyway). It would be my marginal tax rate, not his, because they are my shares.

Say if I sold his shares and transferred to the money to him minus brokerage and 31.5% for CGT and Medicare. Would that work out fairly for both parties?

 

[woolza]

Bonkerrs,

I am unsure if this will be of much help but I am about to buy some shares & do an off market transfer to my son & just hope that in 20 years they will be worth something to him.

You may be able to do an off market transfer with your situation. Last time I did a transfer it cost me $54 per transfer.

Unsure if this helps you.

 

[clayton4115]

Say if I sold his shares and transferred to the money to him minus brokerage and 31.5% for CGT and Medicare. Would that work out fairly for both parties?

yes that sounds fare, but it all depends if he makes a profit on those shares when he does come to sell them,

if they are lower, whos going to wear the loss?

 

[alphaman]

I had to sell shares for family members once. I didn't want to, but they are my in-laws so I could not refuse. I was told to "Just sell at tomorrow's high".

 

[bonkerrs]

Bonkerrs,

I am unsure if this will be of much help but I am about to buy some shares & do an off market transfer to my son & just hope that in 20 years they will be worth something to him.

You may be able to do an off market transfer with your situation. Last time I did a transfer it cost me $54 per transfer.

Unsure if this helps you.

Yep, that sounds like an option too! How/who did you do this with?

if they are lower, whos going to wear the loss?

Don't understand what you mean. Lets say I get 1,000 shares at 1.55 for him and he wants me to sell it at 2.15. No one wears the loss, the sell price is known before execution. Is that what you mean?

 

[woolza]

Yep, that sounds like an option too! How/who did you do this with?

If you are Chess sponsored then it will need to be done through your sponsoring broker at a cost. If you are issuer sponsored than I believe it is done through the particualr registry of the share you hold. Unsure if that costs anything. My transfer was from Issuer to Chess which cost $54 through Commsec.

 

[beamstas]

What are you going to do if they go down?

 

[bonkerrs]

What are you going to do if they go down?

I think doing an off market transfer would be the best option. I'm so worried about getting it right I totally forgot shares can head south

 

[Julia]

Yep, that sounds like an option too! How/who did you do this with?

Don't understand what you mean. Lets say I get 1,000 shares at 1.55 for him and he wants me to sell it at 2.15. No one wears the loss, the sell price is known before execution. Is that what you mean?

So what's the arrangement if they don't get to 2.15?
If I were you I'd give some more thought to the whole deal and put it in writing, signed by both parties. This sort of thing has the potential to cause family trouble in future.