Shares & Funds CGT and DRP

Discussion in 'Accounting & Tax' started by gty12, 27th May, 2020.

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  1. gty12

    gty12 Well-Known Member

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    Hey all,

    Was hoping you could help me with four queries I have relating to shares:
    1. Am I correct that I do NOT apply the 50% discount of ownership for more than 12 months if the shares have made a capital loss. My understanding is the 50% is only applied for gains?
    2. Am I correct that share capital losses can only be put against share capital gains, not general income?
    3. Am I correct that when calculating a share capital gain (for a share held over 12 months) in the same year as I have made a share capital loss the formula is=capital gain-any capital losses from any other shares (regardless of if not the same company) and then 50% of this, NOT 50% of the capital gain-100% of the capital loss?
    4. I sometimes use Dividend Reinvestment Plans for shares, in this scenario sometimes (often) not all the dividend can be reinvested as the remaining amount does not add up to the price for 1 whole share. Do I get this remainingamount when I sell, and if so how?
    Thank you very much,
    gty12
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    1. only gains get the 50% discount

    2. capital losses can offset capital losses, even those of a different type of asset. Cannot offset income - except perhaps with companies and trusts

    3. yes, deduct losses first and then apply 50% discount

    4. no. Not sure how it works but I have one share of something and keep getting dividends which should add up to a second share in 10 more years.
     
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  3. gty12

    gty12 Well-Known Member

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    And sorry Terryw, one other one about the broker fees for shares, my understanding is capital gain is the gain minus both the selling and buying fees?
    I take it capital loss is the same, only these fees increase the loss?

    Thanks,
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    costs with the purchase and sale of shares are called cost base expenses and can be used to reduce the capital gains - or increase the losses.
     
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  5. Trainee

    Trainee Well-Known Member

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    The share registrar keeps track of this. When you sell all your holdings, the registrar will refund the remaining amounts.
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Tax law for cgt contains the formula for how gains and losses and discounts etc are applied. Total gains are first reduced by losses. The taxpayer can choose whether the discounted, indexed or non discount is applied first. I would usually apply non discount gains first
     
  7. gty12

    gty12 Well-Known Member

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    Wanted to add another question here if I may:
    1. Imagine I bought 1,000 shares in Company A 2 years ago for $X
    2. Then I bought a further 1,000 shares in Company A only 6 months ago for $Y
    When I am calculating CGT for selling some the shares (say 700), can I pick which 'parcel' I am selling (as in option 1 only), or does it have to be a weighted average blend of the two (thus also blending the 50% CGT discount rule)?
    Thank you,
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    covered here:
    Tax Tip 148: CGT and Different Parcels of the Same Shares Tax Tip 148: CGT and Different Parcels of the Same Shares
     
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Weighted average = No
    Specific parcel ? Maybe
    FIFO is otherwise typical.