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wash sale rules

Discussion in 'Accounting, Tax & Legal' started by sav, 4th Jun, 2012.

  1. sav

    sav Member

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    I'm seeking some clarification on what constitutes a wash-sale. Particularly what the ATO would classify as "the same, or substantially the same, asset" and "a short period of time"

    If I sold STW for a capital loss and bought the same $ worth of VAS on the same day, would it be a wash-sale? Is that "substantially the same asset"? What if it was one of the major banks for another, or BHP for RIO?

    Does anyone know the period of time required between the sale and purchase of an asset so that it wont be classified as a wash-sale?

    Thanks for any assistance
     
  2. Terryw

    Terryw Well-Known Member

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  3. sav

    sav Member

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    thanks Terryw

    the link is interesting. paragraph 6 seems to confirm that in all of my examples the assets are not the same or substantially the same. therefore does dominant purpose even come into it? if it does, then what if:

    I sell STW and buy VAS because I want exposure to a broader index, with lower fees and more regular dividend payments. Maybe I also prefer Vanguard as manager.

    With the banks/miners (any stocks really) there could be many reasons I prefer one company over the other while still wanting to retain exposure to the same industry.

    what do you think? cheers
     
  4. Terryw

    Terryw Well-Known Member

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    Sorry I think I misread your post.

    If you are buying different shares then I think you should be ok from a tax POV. But only do so if the shares are a good investment
     
  5. sav

    sav Member

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    Location:
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    no worries, thanks for your help.

    just to confirm, if i'm buying different shares, is that end of story not a wash sale? or does the dominant purpose justification still come into it?