Sell in June for Capital Losses

[krisbarry]

lamost all small cap stocks have been punished over recent weeks due to tax loss selling.

Ohhh roll on July....Please!

 

[Prospector]

Hi Prospector

Coup[le of points. The tax rate on capital gains for superannuation funds is down to 10%.

Also the ATO have indictated that the old method of "crystalising losses" could be subject to Part IVA of the tax legislation. (That is the ATO could disallow the transaction on the grounds that it was done purely for the avoidance of tax).

I am talking about the case where a person bought 2000 AMP shares in 2002 for $13 and now wishes to sell them for $8 as there are other capital gains to offset. On the 23 June at 10:00am he sells all 2000 for $8, then at 10:45am he buys 2000 AMP shares back at $8. In that scenario the ATO has recieved legal advice that suggests Part IVA would apply to the transaction.

The advice would be to keep some distance between the sale and repurchase date and also to purchase a different parcel of shares. Even keep some evidence for buying back in (eg Sharebrokers advice column etc).

Seems tough but unless you can argue there was another reason for selling and buying the same number of shares on the same day for the same amount - other than for tax reasons - the ATO would be in the box seat.

Another thing to remeber is the ATO are increasingly using company registers and ASIC data to check audit activity regarding share transactions - with the increased number of people investing in the sharemarket whis will only be ramped up by the ATO.

Duckman

Wow - that really sux! Fortunately I havent done this - ie sold then rebought on the same day or even the same week, but really there are very good reasons why you might do this.

Are you sure bout the 10% on capital gains in Super Funds? Or is that the rate after the fund has held them for 12 months?

 

[Duckman#72]

Wow - that really sux! Fortunately I havent done this - ie sold then rebought on the same day or even the same week, but really there are very good reasons why you might do this.

Are you sure bout the 10% on capital gains in Super Funds? Or is that the rate after the fund has held them for 12 months?

Hi Prospector

Yes it does sux. Yes there can be some other reasons for buying and selling BUT if you sell and buy the same shares on the same day for the same price it really tilts the view in favour of the ATO. Sure you can argue that you are reducing the average price but......if you sold them all and then bought them all back what is the primary purpose of doing this? You are not lowering your average you are disposing of the lot.

Yes 10% after 12months.

Duckman

 

[carmo]

I can't see the difference in buying and selling in one day, from the CML Buy Back. You sell at a price that provides you with a Capital Lose, which you use to offset gains, but still get you value in a Franked Dividend. The tax law is in a complete ass.