Tax question... transferring capital losses

[WinnieBlues]

Quick question....i have had significant capital gains this year....my old man has had significant losses....can i do an off market transfer of his shares to mine, sell them, realise the loss, and offset them against my gains???

Thanks in advance

 

[prawn_86]

Re: tax question....transferring capital losses

Im not an accountant so i could be wrong.

But the consideration you pay for the off market transfer would have to be at or near market calue, so there would be no loss for you to claim, otherwise its considered 'share/tax washing' or something like that.

 

[surfingman]

Quick question....i have had significant capital gains this year....my old man has had significant losses....can i do an off market transfer of his shares to mine, sell them, realise the loss, and offset them against my gains???

Thanks in advance

I am an Accountant and I am positive you cant do this, there is a number of rules stopping this.

Firstly your Father would have to realise the loss on transfer and you would get the shares at market value.



Click here for ATO site

Adjustments to capital proceeds

In some cases, if you receive nothing in exchange for a CGT asset (for example, if you give it away as a gift) you are taken to have received the market value of the asset at the time of the CGT event. You may also be taken to have received the market value if:

* your capital proceeds are more or less than the market value of the CGT asset, and
* you and the purchaser were not dealing with each other at arm's length in connection with the event.

This is known as the market value substitution rule for capital proceeds.

You are said to be dealing at ‘arm's length’ with someone if each party acts independently and neither party exercises influence or control over the other in connection with the transaction. The law looks at not only the relationship between the parties but also the quality of the bargaining between them

 

[Krusty the Klown]

Am also a bean counter and can confirm surfingman's comments.

WinnieBlues what you are proposing constitutes tax avoidance.

Keep trying though..

 

[bigdog]

What about where I have bought shares on behalf of my son in my account and name and he has paid me for the shares?

 

[Krusty the Klown]

What about where I have bought shares on behalf of my son in my account and name and he has paid me for the shares?

Minors can't legally own shares so if he is under 18 they will have to remain in your name until then, and you carry all the tax consequences until then.

If you transfer them to him then, it will be at market value, and it will be a CGT event, so you will have to pay CGT at the time.