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Selling Shares - Working Out Capital Gains

Discussion in 'Shares' started by archangelsupreme, 11th Oct, 2008.

  1. archangelsupreme

    archangelsupreme Well-Known Member

    Joined:
    7th Sep, 2007
    Posts:
    206
    Location:
    Australia
    Hi guys, needs some help here.

    I'm with Comsec and haven't sold any shares to date...EVER!.

    Need some help with Capital Gains Tax workings...etc..if I ever sold shares.

    Let's say i bought 100 BHP shares @ $35......then bought another 100 BHP Shares @ $30.

    Now the share price is at $40 each (wishful thinking LOL) and I want to sell out.

    When I sell 50 BHP shares via Commsec....how does it know which bunch I bought it under...or does it even care or distinguish between the lot i bought at $30 and the one at $35?

    If it doesn't distinguish....how do I work out my capital gains.....did I base the gains on $35 (First in First Out)....or $30 (Last in First Out)....or can i decide myself which cost base to use when I sell?

    Thanks
     
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    AS

    I think I've read somewhere that it's FIFO
    The ATO would like that one because they are collecting more tax...

    Cheers
     
  3. jabba_jones

    jabba_jones Well-Known Member

    Joined:
    2nd Dec, 2007
    Posts:
    60
    Location:
    Sydney

    You're allowed to choose which parcel you would like to sell. In this simple example you would choose the $35 parcel so you pay less tax now. However say you bought the $30 parcel first and you had held it for over 12 months and the $35 parcel was less than 12 months, that would be the better parcel to select as you can get the divide by two discount on the capital gains.

    If you only have a few parcels a simple spreadsheet should be able to work out the best one to select, if you are an active investor i'd recommend using an accountant that has a proper CGT system for your portfolio. Since you don't need to nominate the parcel you sell at the time of the sale, only at year end, hindsight can change which one you would select.