This is a mobile optimized page that loads fast, if you want to load the real page, click this text.

CGT on partial sale

Jump to new

MACCA350

Joined
22 June 2008
Posts
561
Reactions
0
I've just sold a portion of a few stocks that are around double what I entered so I can retain the initial capital outlay and ride the profits.

Since this is my first financial year of trading I have yet to deal with CGT.
My question is: Is the CGT applied on a per share basis or on a per trade basis?

For example(ignoring trade costs) here are two versions that I can see, which one is more correct?

1) per share:
buy 100 @ $1 = $100
sell 50 @ $2 = $100
CGT = $50

2) per trade:
buy 100 @ $1 = $100
sell 50 @ $2 = $100
CGT = $0

One other thing, how does the fact I have previously averaged down on a couple of shares affect things? Is my cost base simply the averaged price?
And which buy date is used for CGT timing? Is it the original buy date or the last averaged down date?

cheers
 

hi

CGT is calculated per share basis, for your second question, CGT is calculated as per the share price of that particular trade and not an average price on a FIFO basis (First In First Out)

i.e if you both ABX shares at $1.00 one year ago, and again ABX shares at $1.50 six months ago and now sell today at $2 you would chose the $1.00trade, you cannot average the trade and use that average figure for CGT purposes.
 
Also, I've been using an Excel based spreadsheet I made to track my trading and report a few bits of infomation, while this has been fine so far, is there anything around that would make tracking simpler and that can accommodate more complex trades(ie averaging down and partial sales)

What do you guys use?

cheers
 

I use stator it is very good, makes things very simple at tax time.

Thread on it here.
 
How do they determine which buy date is used? or is that something you choose when calculating the total CGT to report?

So in the case of the example:
1) per share:
buy 100 @ $1 = $100
sell 50 @ $2 = $100
CGT = $50
Click to expand...
Even though there has only been a return of capital(ie no physical profit yet, the physical profit take would occur when the remaining shares are sold) you still have to pay CGT on the $50?

That's a worry as I have returned about $85k of capital and allowing the profits to ride. Based on what you are saying I will end up with about half of that capital return being shown as a CGT event, even though I haven't actually realised those profits in real reality........at least that's how I look at it

cheers
 
what do you mean by return of capital, your explanation indicates to me a CGT event has occured ,if you have not held the share for more than 12 months there is no CGT discount

for your first question, its on a FIFO basis,

First in First Out of when you bought your shares and when you sold them, thats how they work out your cost base for CGT purposes.
 
clayton4115 said:
what do you mean by return of capital, your explanation indicates to me a CGT event has occured ,if you have not held the share for more than 12 months there is no CGT discount
Click to expand...
I meant the recovering of capital outlay

for your first question, its on a FIFO basis,

First in First Out of when you bought your shares and when you sold them, thats how they work out your cost base for CGT purposes.
Click to expand...
Ok.

cheers
 
clayton4115 said:
First in First Out of when you bought your shares and when you sold them, thats how they work out your cost base for CGT purposes.
Click to expand...

That sucks...seems stupid to pay capital gains tax when u haven't made a
capital gain....will certainly make tax time interesting for me.
 
You can sell a number of different ways:

FIFO First in First Out
LILO Last in Last Out
Or if you keep the correct records select from the purchases.

From memory it's different for a trader to investor.

I have a good TR on my pc at work.
 
clayton4115 said:
First in First Out of when you bought your shares and when you sold them, thats how they work out your cost base for CGT purposes.
Click to expand...
I disagree about this. Unless there has been some change in the rules you can choose which Buy price you offset a Sale against.

Say you did the following:
Buy 100 ABC @ $1.00 on 1 January 2008

Buy 100 ABC @ $1.50 on 1 July 2008

Sell 100 ABC @ $2 on 1 July 2009


You can choose whether to calculate the CGT against the 1 July 2008 purchase or the 1 January purchase. Obviously you will choose the July Buy as your c gain is only 50c per share.
 
So_Cynical said:
That sucks...seems stupid to pay capital gains tax when u haven't made a
capital gain....will certainly make tax time interesting for me.
Click to expand...

But you have made a capital gain.

The capital gains/loses are worked out on each share purchased not each parcel.
 

Unless of course you have not used your tax free allowance in which case you may choose the outcome that gives you the biggest capital gain, as this will mean lower tax bills in future tax returns.

I have heard of people using a choice of buy price (I use FIFO), but can not find an ATO reference allowing it. Do you have an ATO or other reputable tax company reference?
 
nomore4s said:
But you have made a capital gain.

The capital gains/loses are worked out on each share purchased not each parcel.
Click to expand...

Buy 1000 XYZ @ $1.00 on 1 January 2009

Sell 500 XYZ @ $2.00 on 1 June 2009

Capital = money, so no capital gain - that's what i find stupid...don't make sense to me.
 
I guess the reason they've decided to calculate CGT on a per share basis instead of a per trade basis is because otherwise I could sell out enough to recover my capital and leave the profits to ride(at no capital risk) until the 12 month period is up for the discount on CGT............at least that's the only tax reason they could have because otherwise there is really no difference how it's worked out.

The way they have done it means I'm paying CGT on no real world capital gain since my profits are still riding in the stockmarket and I've sold enough to reimburse what I put in those particular stocks...........basically I'll be paying CGT out of my original capital

Oh well, that's the way the cookie crumbles
 
Ordered and paid for Stator two days ago and have since sent two emails but have had no reply with my user licence

How long does in usually take these guys to communicate with customers?

My patients is wearing thin, anyone have their phone number?

cheers
 
Macca, mine took about half an hour to come back. Try sending a PM and an email to Anthony (user name - Stator) on the Stator thread and see if you can get a reply of him. He was last on the site on the 12.04.09 though so not sure how often he logs on.
 
So_Cynical said:
Buy 1000 XYZ @ $1.00 on 1 January 2009

Sell 500 XYZ @ $2.00 on 1 June 2009

Capital = money, so no capital gain - that's what i find stupid...don't make sense to me.
Click to expand...

i understand what your trying to say. Because you havent locked in the gain, it is possible that :
-$1000 BUY 1000 xyz@ $1.00
+$1000 SELL 0500 xyz@ $2
_______
$0.00

But you still own 500 xyz shares. If those shares then became worthless, you have gained nothing. Consisting of a $500 capital gain, followed by a $500 capital loss.

Your cash position is currently same as before share purchases(you sold enough shares to cover the initial outlay). So you have effectively got same cash plus some free shares out of it.

Problem is you will now pay CGT out of your cash position, so if you required that balance to generate return you are now hampered by a lower capital base. Could be crippling. You should have sold additional shares to also cover you CGT liability.
 

Very little chance of that Nathan...i don't buy into rubbish....ive been tempted, and
come close a couple of times, anyway i spread my money after the initial big risk.

What i have actually been doing since Feb is more along the lines of

Buy 10000 XYZ @ 1.00 each = 10k
sell 8000 XYZ @ 1.12 each = 9K

Leaving 2000 XYZ @ 0.50 each ( 50 cents free carry approx) as a longer term hold, at
least that's the way ive been looking at it...and working fine so far.

Very little risk of losing my capital longer term...capital well spread out and low entry's
achieved, plan to do this 10 more times before Xmas, with no realized gains.
 
You must log in or register to reply here.

Similar threads

Grok's High Probability Trend-Momentum Breakout System
Replies
9
Views
2K
divs4ever
Div's crude and simple channel trade strategy
Replies
0
Views
1K
divs4ever
August 2025 DDD
2 3
Replies
54
Views
7K
ducati916
A
Getting out of shares and working out taxes
2
Replies
28
Views
4K
dyna
D
April 2025 DDD
2 3
Replies
53
Views
10K
ducati916
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more...