Minimising Loss?

[barnz2k]

I could have sworn there used to be a topic of the same name, but cant find it in search. Im wondering about methods to minimise loss that has already occured- that is, you have a stock that has tanked (no/slipped past stop loss), and you dont think its going to go up anytime soon, thus leaving you with no interest to continue holding, and a share which is considerably down.

Do I remember correct that if you sell shares at a loss, that loss can be carried into the following tax year to offset gains on shares if you have no gains on shares in the current year that need offsetting?

Can losses in shares be deducted from any other incomes? like bank interest?

Like now coming up towards end of tax year - would it be better selling the stock at a loss before or after the fin. year if I plan to put that money into other (hopefully better) shares, and not sell any at a proft this fin. year.

cheers

 

[Trembling Hand]

Try the ATO,

http://www.ato.gov.au/individuals/content.asp?doc=/content/00098082.htm

 

[Julia]

Do I remember correct that if you sell shares at a loss, that loss can be carried into the following tax year to offset gains on shares if you have no gains on shares in the current year that need offsetting?

Yes. The capital loss can be carried forward as necessary until you have a capital gain against which you want to offset it.

Can losses in shares be deducted from any other incomes? like bank interest?

No. Capital losses can only be offset against capital gains unless there has been some recent change in the rules.

 

[barnz2k]

Cheers Julia

Ill try and read through some of the ATO info also TH

so no real difference if I sold before or after new fin. year. Good that it can loss can be carried forward so I can sell when i want.

 

[white_goodman]

whats the deal with share profits, are they taxed as capital gains tax or through your income tax?? cant possibly be both

 

[MichaelD]

whats the deal with share profits, are they taxed as capital gains tax or through your income tax?? cant possibly be both

If your trading is a business (eg you have a trading plan, keep meticulous records of your business expenses etc) then profits are treated as income, just like that from any other business.

If you are the typical Aussie stock buy and holder, then any gains will be subject to capital gains tax.

 

[white_goodman]

If your trading is a business (eg you have a trading plan, keep meticulous records of your business expenses etc) then profits are treated as income, just like that from any other business.

If you are the typical Aussie stock buy and holder, then any gains will be subject to capital gains tax.

ok so if i get this straight, all share price gains are subject to CGT and all dividends are subject to our income tax level?

 

[MichaelD]

ok so if i get this straight, all share price gains are subject to CGT and all dividends are subject to our income tax level?

If you are the average Australian who dabbles in shares then yes, realized gains in share price are subject to CGT and dividends are subject to income tax. This would apply to most posters to ASF.

If your profession is share trading then this does not apply - in that case all your gains are classed as business income and taxed accordingly and all your losses are classed as business costs, just like for any other business engaged in the buying and selling of goods.

(I'd better put some sort of disclaimer in here: for goodness' sake talk to your accountant if you don't know for sure - you don't want the tax office coming after you.)

 

[AlterEgo]

If your profession is share trading then this does not apply - in that case all your gains are classed as business income and taxed accordingly and all your losses are classed as business costs, just like for any other business engaged in the buying and selling of goods.

But in reality that's not going to make any difference to the tax you pay, does it? I mean you're still getting taxed at the same rate whether you've declared it as 'income' or as 'capital gain', arn't you? (assuming you're not holding for 12 months for the CGT reduction)

Is there any advantage/disadvantage to declaring your profit as 'income' or 'capital gain'?

 

[Trembling Hand]

Is there any advantage/disadvantage to declaring your profit as 'income' or 'capital gain'?

Big difference. When you are running a business your income is calculated AFTER expenses. Rather than receiving income then paying tax THEN paying expensive.

 

[AlterEgo]

Big difference. When you are running a business your income is calculated AFTER expenses. Rather than receiving income then paying tax THEN paying expensive.

Not sure I follow you.

If you're filling out your tax return, whether you put your profit in the 'income' box or the 'capital gain' box won't make any difference to the total, and you still deduct the same expenses off the total anyway. Whatever way you add and subtract figures will still result in the same total, won't it?

Can you elaborate a bit more on your point?