Need advice on wash sale rules for a newbie

[yse]

Hi I'm a full time student (learning nothing related to business) and im new to shares, with the end of the financial year coming up i was wondering if there are any wash sale rules?

My income for the year is quite less than the lowest tax bracket ($6000) say $2500 and therefore i have about $3500 that can be made without incurring tax, so i was thinking about profit taking on one of my holdings to take advantage of this $3500 untaxable income i have, and then purchasing these shares back. Is this allowed?? Or is there a rule where i can only buy back 30 days later or something like that for my profit be counted as income. I've googled around without much luck.

Cheers

 

[shadders]

spoke to my accountant today about just this issue... I am actually looking to lock in some losses to offset some gains though...

you can deal each individual security as an investor or as a trader... difference being...

if it's a 'trader' security you don't have to sell to realise the gain/loss... you can choose to take it at market value as at 30th june... BUT you don't get access to the 50% CGT discount if you hold the security for over 12 months...

if it's an investor security you do have to sell and buy back... I believe the has to be in the open market as you must be deemed to be 'at risk' in the transaction... i.e. you can't sell it off market to a company you own then buy it back... As for time between the sell and buy... I can't recall which but it's one of: no minimum period, OR 1 day... As an investor you DO get access to the 50% CGT discount if you hold for 12 months but if you sell and buy back you trigger a CGT event and the 12 months has to start again...

hope that helps....

 

[yse]

Yes, very informative post, thanks

One thing I'd like to confirm is, is it my choice to deal the security as an 'investor' or 'trader' security? Or are there certain conditions that define a 'trader' security or 'investor' security?

 

[rub92me]

To my knowledge you don't have do anything like that as an individual. If you sell the shares and realise a gain, then the profit is a Capital Gains Tax event and will be taxed accordingly (or not if you stay under the threshold). What you do with the proceeds (e.g buy back the same stock or buy a big LCD screen) has no impact on this. To be sure check the ATO website though...