Trying to plan ahead for taxtime. Anyone know how this works?
If I bought ASX shares in 2015, and they gained 30% since then (for example), but lost 10% this tax season.
On selling now, will I include the 30% capital gain, or is it a legit 10% loss.
I not trying to cheat, I just want to know how it works to follow the ATO rules.
Please don't mention accountants unless you know free ones, Ha.
That's the question. As this year I'm in the 'no' tax bracket (< $20000), next year if I sell I'll likely pay lots of tax.
Capital gain is calculated on what you actually sell the shares for. Doesn't matter if they gained 1000% on paper, it's the actual selling price that matters.
Thanks.
I guess CG with an investment property will be treated the same, so I guess if you sell something worth $1M ten years after purchase, you pay the full CG tax rate, even if you sell at a loss. Ouch.
I will go read ATO website.
No, if you sell at a loss you pay nothing. You pay on the capital GAINS. If you bought it at 800K and sell it at 1M then you pay CG tax on 200K (or half that, if held over 12 months). If you sell it at 600K then you pay no CG tax.
If you sell it at 600K then you pay no CG tax.
AND if you do make a loss, you can carry the capital loss forwards (indefinitely) and offset other capital gains against the loss down the track.
You realise what you pay an accountant is 100% tax deductible right ? If you do not understand what you are doing with lodging your tax, get an accountant otherwise it might end up costing you alot more in the future.
Fair enough. I have always done my own, but good advice.
your knowledge is horrible though. you really don't understand how tax works. so yeh, probs should get help
Yep, this is a fairly basic question. If you're not familiar with CGT probably best to get an accountant!
There is a difference between getting just an accountant vs a good accountant.
Sometimes u still pay more when using an accountant coz some of them dont know exactly what they are doing.
I suggest better doing your own research first and then taking a second opinion.
Here's the broad strokes for you.
Sale price less purchase price (including any costs associated with the purchase or sale, such as brokerage).
If owned for longer than 12 months, reduce this amount by 50%.
This amount is added to your taxable income.
You could split the sale over two or more financial years (1 July to 30 June is a financial year) and again broad strokes, the amount will be split in 2 or more lots.
An investment property is more complicated, however there are more costs that are able to be "added back". Records are important to substantiate.
As @garetz said, discussing with an Accountant before the sale to get a clear understanding of the implications and ways to minimise any tax, is a valuable (will pay for itself) step.
Disclaimer: This is all general info. Do your own research.
If I bought ASX shares in 2015, and they gained 30% since then (for example), but lost 10% this tax season.
On selling now, will I include the 30% capital gain, or is it a legit 10% loss.
You need to calculate the total gain or loss from when you acquired the shares and sell the shares.
You don't calculate it by the fluctuations of the the profit and loss by a yearly tax basis.
So in your example you bought $100 worth of shares in 2015, and at some time it was worth $130 (30% gain), and right now its only worth $117 (-10% from $130).
So your profit is $17, pay CGT on that. Edit: If you held the share for more than a year then you only pay CGT on half of the profit. So CGT on the $8.5 ($17/2).
Thanks guys for all your comments.
I think I have a good start now.
Anyway, a tax accountant seems the best idea, I'll maybe handle it myself after seeking their advice.
Cheers all.
Its not that complicated.
See this worksheet https://www.ato.gov.au/Forms/Using-the-capital-gain-or-capit…
You could sell enough shares to make a capital gain of $41000 (assuming no other income) and not pay any tax on the gains
Your profits and losses are realised only when you actually sell them. There is a misconception that this only applies to crypto currency. Whether you should keep holding until you make a profit is a different question.
In my opinion, if you only have shares, you can handle it yourself. Obviously hiring an accountant will be easier. You can obtain EOFY summary from your broker and fill your tax return accordingly. That way you can also learn how it works.
How do you actually find a good accountant? I've never used one before and I don't know anyone personally who has.
Ask around. If none of your friends have one, ask your parents or their friends, workmates, classmates etc. If you're still stuck then ask on your local community Facebook group for recommendations then suss out a couple who sound good.
A friend of mine said he used to go in to the counter at the Perth ATO, and ask questions and they helped him fill out his tax return.
They should be pretty good at the subject. I may see if that's still available to the public.
Lakeman wrote:
"Its not that complicated.
See this worksheet https://www.ato.gov.au/Forms/Using-the-capital-gain-or-capit…
You could sell enough shares to make a capital gain of $41000 (assuming no other income) and not pay any tax on the gains"
Could you please explain this in a bit more detail - is the $41000 figure related to a persons tax bracket?
Thanks
I will have a punt…
Because you get 50% off tax rate if shares are held over 12 months, your taxed as about $20k income.
As the non-taxable tax bracket is approx. anything under $20ish
0 to $18,200 Nil tax
Plus basic deductions allowed without paperwork is something like $2500 (possibly wrong)
You could pay $0 tax on up to $41000 cgt.
My extra question is, if holding shares for over 12 months, the 50% CGT discount doesn't also somehow apply to Dividend earnings as well, by any chance? (I'm wishful thinking)
no deductions allowed against Capital Gains without paperwork…. The tax free threshold applies up to $18,200 and then there is some tax offsets which effectively boost the tax free threshold.
As per the other comments, you are overthinking this. What happened in the intervening years is irrelevant.
You take the buy price, minus the sell price, deduct any expenses (brokerage, etc), and then that is your profit (or loss).
You put in the dates of the buy and the sell and the tax office will calculate whether you are entitled to the capital gains discount (for assets held over 12 months).
It's not a complicated calculation
Is it not just what you sell them for vs what you paid for them?