Shares held > 1 year pay half tax?

I'd assumed that shares held for longer than one year were taxed at half the profits, but my tax agent says it depends whether I'm trading or investing. Can someone tell me if this is correct please? Thanks in advance.

 

There is a 50% CGT discount for capital items held longer than 12 months. if you are trading it will be straight income and no discount.

 

Thanks Terry. On another forum though I was told that I can claim to be making both short term trades and long term investments, and claim the 50% CGT discount on the investments. Does that sound reasonable to you?

 

I don't know about that - you are either a share trader or an investor. but it could be arguable. Seek advice from your tax agent.

 

Yes apparently the law is rather murky, but here's an agent's reply for interest's sake (I'll pass it on to my agent for their opinion) :

"The definition revolves around whether the activity is profit making undertaking. Essentially it means that if you buy and sell very regularly with the intention of a quick profit, you should be putting your gains in the business section at item 15 of the return. However I note that it is very possible to put your long term holdings as a capital gain and not business income and claim the 50% discount for shares held over one year. I have 5 full time trading clients who definitely have large long term holdings that will receive the 50% discount. I think you need a new accountant if he is advising that you can't receive the discount."

(Maybe I'll leave out the bit about needing a new accountant )

 

Share Trading

I have to agree, assets which are held for longer than 12 months are entitled to the Discount method (50% Reduction in Capital Gains Tax).

This would also be the same for inviduals who flip residendatal property.

Trading shares, which are not held for 12 months will be not be entitled to the discount. The ATO may look at share traders, as using share trading as trading stock liike another business.

Speak to accountant who has share trading clients.

Kind Regards

Christianrenel

[email protected]

 

I had a senior member of the firm check it out - he agrees I can get the 50% CGT as well. Should I be concerned that a simple email to my accountant reduced my tax bill by around $50k?

Also I'm told that by putting the shares I held at the end of the last financial year into an 'Investment Account' will save me a bunch of tax (apparently it's just a classification thing). Anyone know if that's the usual thing? (My previous accountant didn't do it as far as I know.)

 

Yes you should be concerned.

investment account - he probably means class the shares as investment instead of trading.

 

I see you're a tax advisor Terry - do you think I should give the senior member a chance or just find a new firm post-haste? (I'm in Melbourne btw.)

 

Only you can decide. Will the senior member be doing your tax return in future?

 

Not sure yet - I sacked my previous accountant because he suddenly increased his fee about 30%, and maybe I emphasized a focus on low fees too strongly so was handed over to a junior in the firm - good evidence that you get what you pay for I guess.