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Claiming Capital Losses on Shares - Is this the correct way to do it?

Discussion in 'Accounting, Tax & Legal' started by Sk3tChY, 13th Dec, 2010.

  1. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    John buys 150 units of CBA at $35.00 on 10/06/08 costing $5,250.00.
    John buys 150 units of CBA at $32.00 on 17/08/08 costing $4,800.00.
    John buys 400 units of CBA at $30.00 on 22/12/08 costing $12,000.00.
    John sells 400 units of CBA at $25.00 on 19/07/09 returning $10,000.00.

    From what I've been told, you go off your earliest buys to work out your capital losses and work your way up, so in this scenario it would be:

    (150*35.00)+(150*32.00)+(100*30.00)=13,050.00

    So 13,050.00-10,000.00 would equal Johns capital losses.

    Therefore in the scenario above $3,050.00 would be Johns deductible capital losses, correct?

    Furthermore, if John had paid $20 in brokerage fees for each of those Buy/Sell transactions, wouldn't they be added to the capital losses total?

    Which in this case would be:

    100% of the $20 brokerage fee on the buy order on 10/06/08 , because all those units are included in the capital loss.

    100% of the $20 brokerage fee on the buy order on 17/08/08 , because all those units are included in the capital loss.

    25% of the $20 brokerage fee ($5) on the buy order on 22/12/08 , because only 25% of the units in that buy are going towards the capital loss.

    100% of the $20 brokerage fee on the sell order on 19/07/09.

    Which would bring the total combined brokerage fee deduction costs to $65.00, thus bringing the total deductable capital loss to $3,115.00.

    Note: This isn't homework or anything, I've just used a hypothetical scenario above so as to not include all my own financial information. I'd just like to make sure I'm calculating things correctly.
     
    Last edited by a moderator: 13th Dec, 2010
  2. Rob G.

    Rob G. Well-Known Member

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    6th Jun, 2007
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    Location:
    Melbourne, VIC
    If you have kept the paperwork, then you can elect which shares you sell.

    Each share is an individual asset.

    Cheers,

    Rob
     
  3. Waimate01

    Waimate01 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    157
    Location:
    Sydney
    You can choose to sell in whatever order you like, but once the decision is made and tax return filed, it is locked in.

    I think those brokerage calculations are correct. Easiest way to think about it is to add the brokerage cost to your buy price, and deduct it from your sell price, then just forget about it. Eg:

    John buys 150 units of CBA at $35.00 on 10/06/08 costing $5,270.00.
    John buys 150 units of CBA at $32.00 on 17/08/08 costing $4,820.00.
    John buys 400 units of CBA at $30.00 on 22/12/08 costing $12,020.00.
    John sells 400 units of CBA at $25.00 on 19/07/09 returning $9980.00.
     
  4. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Thanks for the replies guys, very helpful. :)

    So in the scenario above, if I so choose - it could be as simple as using the last 2 trades where John bought 400 units at $30.00 and then sold 400 units at $25.00?

    So $12,000.00 - $10,000.00 = Capital Loss, non-inclusive of brokerage fees.

    Then at a later date I could offset the earlier buy losses from the earlier trades?

    Yup, I think Comsec automatically does the calculation for you. I was just working everything out separately for the sake of just understanding and illustrating exactly what's going on.

    Thanks for the help guys, I'll probably just re-clarify all this with my accountant.

    One last question..

    This capital loss was from a sale of units a couple of years ago and I'm not entirely sure whether or not I mentioned it in the tax return for that year.

    Is it possible to include it in any subsequent tax return? Or would I need to re-do that return from that particular year or something?
     
    Last edited by a moderator: 13th Dec, 2010