Tax Tip 232: Simple Tax Strategy to Increase Deductions

ATO Customer Service Officer: Hey, @BPhil called and asked about this.

Senior Case Manger: Take note of his TFN and audit his next tax return.

 

Don't bother as you won't get an answer you can rely on. Apply for a private ruling if worried. But get advice on the consequences first.

 

Just rereading this I can't see how this could be considered a wash sale, especially if waiting that long, but even if all done within 24 hours it might be ok

 

The true test for a wash sale can even expand to matters the ATO could consider in the 45day holding period rule eg Beta risk. For a wash sale you would need an absolute clone risk to be replaced and in short term. Even a ETF v's natural market will have variance eg GOLD. Why ? Because real gold may be a futures deliverable where a ETF is an arbitrage hybrid of actual gold and cant be delivered. Beta risk is a matter specific to say having a counterparty agreement to sell the shares after 45 days. Technically the shares are continually held at risk however the risk has been limited by the option and so the beta risk is not met.

If you sell Coles and Buy Woolies these may be same industry but no way could it be argued they have identical risk, eg Compare the 4 banks. They do mimic some behaviours but its not perfect and other defined events may see that share rise and fall vs other bank shares.

 

With higher interest rates at say 6% pa

that is $99,000 in interest

at 47% tax rate the increased interest would result in $49,500 in tax savings per year.

 

Phoning the ATO is waste of time. Its a public servant limited in what they can say. They cannot give advice or rulings. Hint : A wash sale that generates a loss that is carried forward doesnt produce a tax benefit. The predominant purpose may also be to use BORROWED MONEY and so selling down and using borrowed funds to buy may not be a Part IVA concern anyway. Borrowing money is not a element to a wash sale concern in itself