tax on gifted shares

Discussion in 'Accounting & Tax' started by Excalibur1, 11th Apr, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    327
    Location:
    Sydney
    Hi experts

    Few years ago my cousin gifted me shares in an unlisted business. Shares were "worth" around $2k. I believe the value was $1 per share. This was high risk business that if it worked would have huge increase in share price, however it didnt work out that way and the business is now in liquidation.

    Can that "loss" be realised against gains that i made on my other share sales, thus reducing the tax that needs to be paid? Can the loss be carried into future years?

    cheers
     
  2. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,947
    Location:
    Perth
    Can you show you made a loss? Since you didn't pay for them you haven't actually made a loss so it would not be a deduction for you IMO but im not an accountant
     
    Marg4000 and Excalibur1 like this.
  3. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    327
    Location:
    Sydney
    Thanks @sanj I thought the same thing, but was secretly hoping that it would be deductible. heheh
     
  4. Terry_w

    Terry_w Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    22,894
    Location:
    Australia wide
    Market substitution rule may apply to treat cost base of shares on acquisition as market value. So there may be a capital loss.

    But determine market value may cost you more than the loss.
     
    Excalibur1 and sanj like this.
  5. Rob G

    Rob G Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    259
    Location:
    Melbourne
    If that is all the relevant information ...

    Cost base is market value when gifted.

    If shares are cancelled or liquidator declares them worthless then a CGT event happens in relation to those shares and you realise a capital loss.

    Could be other scenarios if there are liquidators distributions on winding up.

    See a tax agent to check your relevant details. Valuation for cost base is possible by a number of means for an accountant or small business valuer.
     
  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    10,398
    Location:
    Sydney
    I would be asking how you came to be gifted $2k of shares. That may affect the costbase. What shares are worth wont be the costbase if they were acquired for consideration that wasnt cash. A common example is employee share schemes. The ESS consideration is generally deferred and assessable at some point. This can be or affect the costbase. So no receipt of income or value seemingly occurs and the shares arent "gifted"either. There may have been a taxing point for the shares too.

    I have seen many contractors granted shares in start ups as consideration for services. Those shares arent gifted.

    Its also possible they were gifted for love and affection but I wouldnt normally expect a cousin to do this.

    A liquidators statement is a requirement for a CGT event. Often liquidators dont issue this if they dont forsee any fee income from the winding up.
     
    Excalibur1 likes this.