tax on gifted shares

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

 

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

 

Thanks @sanj I thought the same thing, but was secretly hoping that it would be deductible. heheh

 

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.

 

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.

 

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.