CGT on partial sale

Julia · 21 May 2009

So_Cynical said:
Buy 1000 XYZ @ $1.00 on 1 January 2009

Sell 500 XYZ @ $2.00 on 1 June 2009

Capital = money, so no capital gain - that's what i find stupid...don't make sense to me.

nunthewiser said:
lol see an accountant m8 .u have made a 100% gain on EACH share purchased

Nun is right, unless I'm completely misunderstanding your post, So Cynical.

For tax purposes it's irrelevant that you still have 500 XYZ shares.
You bought the 500 which you subsequently sold, so you have to pay tax on the capital gain on those 500.

So_Cynical · 21 May 2009

Julia said:
Nun is right, unless I'm completely misunderstanding your post, So Cynical.

For tax purposes it's irrelevant that you still have 500 XYZ shares.
You bought the 500 which you subsequently sold, so you have to pay tax on the capital gain on those 500.

Ah Julia...its appears that is not so. (cant believe i just actually found something
official explaining this) i somehow knew the ATO wasn't insane.

http://www.ato.gov.au/individuals/content.asp?doc=/content/36687.htm

Quote
A common question people ask when they dispose of only part of their investment
is – ‘How do I identify the particular shares or units I have disposed of’.

If you have the relevant records (for example, share certificates), you may be able
to identify which particular shares or units you have disposed of. In other cases,
the Commissioner of Taxation will accept your selection of the identity of shares
disposed of.

Alternatively, you may wish to use a 'first in, first out' basis where you treat the
first shares or units you bought as being the first you disposed of.

Julia · 21 May 2009

So_Cynical said:
Ah Julia...its appears that is not so.

Um, what is not so? Your sentence above is a bit ambiguous.
The Tax Office reference confirms what Nun and I have said, doesn't it?

And back to how to calculate the capital gain:

if you bought 1000 at $1 on 1 January, then a further 1000 at $1.50 on 1 March, then sold 1000 at $2 on 1 May, you'd choose the calculation of the purchase on 1 March at $1.50 to offset the sale, wouldn't you?

Amor_Fati · 21 May 2009

So_Cynical, I think you have destroyed your own argument. The ATO is only discussing identifying individual shares because you work out the capital gain realised on each share sold.

And Julia yes absolutely, you would only choose the lower buy price ones if perhaps they would get the the discount and the others wouldn't. Identifying the parcels of shares is always better than FIFO, LIFO or weighted average cost assuming you work it out correctly, because it will either be the same or better from a tax perspective.

So_Cynical · 21 May 2009

Julia said:
Um, what is not so? Your sentence above is a bit ambiguous.
The Tax Office reference confirms what Nun and I have said, doesn't it?

And back to how to calculate the capital gain:

if you bought 1000 at $1 on 1 January, then a further 1000 at $1.50 on 1 March, then sold 1000 at $2 on 1 May, you'd choose the calculation of the purchase on 1 March at $1.50 to offset the sale, wouldn't you?

Yes sorry i had a brain meltdown...got so exited about being able to choose which shares i
sell from a holding of multiple purchases....FIFO is out the door. :dance:

Anyway agreed CGT must be payed on the example in question.

bill90 · 19 October 2018

MACCA350 said:
I've just sold a portion of a few stocks that are around double what I entered so I can retain the initial capital outlay and ride the profits.

Since this is my first financial year of trading I have yet to deal with CGT.
My question is: Is the CGT applied on a per share basis or on a per trade basis?

For example(ignoring trade costs) here are two versions that I can see, which one is more correct?

1) per share:
buy 100 @ $1 = $100
sell 50 @ $2 = $100
CGT = $50

2) per trade:
buy 100 @ $1 = $100
sell 50 @ $2 = $100
CGT = $0

One other thing, how does the fact I have previously averaged down on a couple of shares affect things? Is my cost base simply the averaged price?
And which buy date is used for CGT timing? Is it the original buy date or the last averaged down date?

cheers

Nr 1 is the only correct answer. Bottom line is pps (price per share). You buy at 1 and sell at 2 CGT is based on a profit of 50 *2 less 50 *1. And you now have a balance of 50 at 1.

CGT on partial sale

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