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Working Out Cost Base Price After Share Consolidation

Discussion in 'Accounting, Tax & Legal' started by Apocalypso83, 20th Jan, 2018.

  1. Apocalypso83

    Apocalypso83 Member

    Joined:
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    Hi guys,

    First post here :) Am having trouble working out the CGT for some shares I sold because i'm unsure of the cost base price after share consolidations. The shares in question are Elders Ltd (ELD). There were a few parcels purchased, a couple consolidations, plus a bonus parcel.

    Here's the details – in order of transaction date

    a) BUY 01/09/96 - 1613 @ 1.40 = $2258.20
    b) BONUS 01/10/96 - 161 @ 0.00 = $0.00 (1 for 10 offer)
    c) BUY 01/11/96 - 376 @ 2.19 = $823.44
    d) BUY 18/07/06 - 4800 @ 2.05 + 108.24 broker fee = $9948.24
    e) CONSOLIDATION 1/12/09 - Consolidation 1 for 10, reduced holdings from 6950 > 695
    f) CONSOLIDATION 29/12/14 - Consolidation 1 for 10, reduced holdings from 695 > 70
    g) BUY 30/03/2015 - 319 @ 3.131 = $998.79
    h) SELL 01/03/2017 185 @ 8.09 + 14.95 broker fee = $1481.70

    Total cost of (a)+(b)+(c)+(d) = $13029.88.

    My questions are what do the consolidations (e) and (f) do to the cost base price? At (e) do they become $13029.88 / 695 = $18.75 new cost base?

    And then what does the cost base become at (f)?

    Finally – how do i work out the CGT for the sale?

    I am over my head so any pointers are hugely appreciated! Thank you:)
     
    Last edited: 20th Jan, 2018
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  2. twisted strategies

    twisted strategies Well-Known Member

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    welcome to InvestChat ,

    i am no accounting wizard ( nor accounting guru )

    but unless there is a typo in your calculations , you have crystallized a LOSS

    *** ( h) SELL 01/03/2017 185 @ 8.09 + 14.95 broker fee = $1481.70 ***

    not , minus $14.95 broker's fee ??? for a starter ( or other wise call it $1481.70 after brokerage costs )

    now you may need an accountant to help you calculate the loss ( as acceptable to the ATO ) i doubt they will be over-joyed to pay you something back .

    PS the ATO MIGHT decide only ( h ) - ( g ) is applicable if so then you might be liable to CGT
     
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  3. Apocalypso83

    Apocalypso83 Member

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    hi there :)

    Yep, I calculate a loss too.

    Forgive my ignorance but is a loss not a loss and that's it? Meaning, how can the ATO decide that it's not acceptable? Particularly when it will offset gains i've made (though would still leave me at an overall loss). Dont people often sell at losses to offset gains, and therefore improve their tax position?

    Can you shed some light on why they might decide only (h) - (g) is applicable?

    I definitely need a tax accountant with this I know, but im keen to understand it as much as I can. I just thought a loss was a loss, and a gain was a gain!

    Thanks for your reply :)
     
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  4. Apocalypso83

    Apocalypso83 Member

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    oh and yes you're correct on the broker fee - my oversight.
     
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  5. twisted strategies

    twisted strategies Well-Known Member

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    don't give the tax man a break or they might assume the opposite

    depending on who is the ATO representative , they can be quite lazy and selective on what that read and use for calculations ( hitting a gold card holder for Medicare levies is NOT COOL , guys , goodness knows how long they had been doing that , only got 7 years of that back )

    depending on when capital gains tax was introduced ( and if it ever applied to you )

    the ATO MIGHT use the 7 year cut-off date and claim all the rest is in the distant past ( especially if it saves them paying out )

    yes a loss is a loss and a gain is a gain , but ATO law is a structure all it's own

    the question is was the loss ( or gain ) subject to a tax or tax relief

    ( don't feel bad about being 'over your head ' .. the ATO auditors can make some jaw-droppers as well ... had 7 years of that with a now deceased rellie )

    should you consult a tax accountant , don';t be surprised if he/she still needs an ATO ruling on your case .
     
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  6. Apocalypso83

    Apocalypso83 Member

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    Argh they're a law unto themselves arent they!

    This is part of a portfolio I inherited in 2003 (deceased rellie too) so GCT applies (they're all pre 1985 shares so date of death is used for any CGT events). There are some blue chips in there that I would stand to make substantial gains (purchased in early 90s) if I was to ever sell. Selling is out of the question as it would mean a tax bill of more than my annual salary. Wouldnt it be nice if the ATO would invoke the 7 year cut-off to work in my favour in the event of gain!!

    off to find me a tax accountant....!

    cheers for your help :)
     
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  7. twisted strategies

    twisted strategies Well-Known Member

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    **** Argh they're a law unto themselves arent they! ****

    i had that concept confirmed by a very high tax official after he retired ( he just happened to be a neighbor , and not so obviously rich .. that would have been a very interesting audit , left one very bitter gold card holder though )

    keep an eye on the future , check how your holding would fare if you retire or need to go on DSP

    good luck with that accountant , i am at the other end of the country so i cannot even point you at the right town )
     
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