How do investors here deal with tax issues?

ReXXar said:

I began buying stocks from last September and I now want to rotate into cheaper stocks, but I'll incur a huge tax bill if I sell (more than 35%, tax is more than my day job wages for the whole year), so I'm trying to hold for next two months until September to cut the capital gains tax in half.

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ReXXar said:

Hi I was just wondering how do people deal with tax on profits when they sell shares??

I began buying stocks from last September and I now want to rotate into cheaper stocks, but I'll incur a huge tax bill if I sell (more than 35%, tax is more than my day job wages for the whole year), so I'm trying to hold for next two months until September to cut the capital gains tax in half.

But this is stupid way to go about it, holding on to shares longer than necessary to minimise tax is never good option for an active trader. So what do people do?? Is the best option to set up a company so all profit will be taxed at flat 30% or is there another more tax effective way?

I used to trade futures and they were classified as business income under sole trader as I trade a lot everyday, now I trade stocks maybe once every month or two, is that still classified as business income or capital gain?

Many thanks in advance for any advice.

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Value Collector said:

Yeah. So you utilise the lowers tax rates that apply to you (and other members of the trust) then when those rates go above 30% you put the excess into the company.

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Value Hunter said:

In my own situation I simply just put all the share in my own name, because I own all my shares long term (always longer than 12 months) so when I sell the tax rate will always be less than 30% (e.g. top tax rate is 46.5% including medicare levy and half of that is only 23.25%). Because pty ltd companies are not eligible for the capital gains tax discount.

Also because my share portfolio is substantially geared (no margin loans though) I get to offset the interest and the franking credits against the dividends and I always end up getting a meaningful franking credit refund when I do my tax return. So for me personally a trust or company would give me no tax advantages and would just cost me more in accounting fees (and cause me more headaches) to run. Also since I am not a businessperson and by the way I run my life I am unlikely to ever be sued or chased by creditors (if I ever get married one day the family court can ignore/over-rule trust and company structures any way) the asset protection aspect of having trusts is not so useful to me.

In my case I just keep it simple and own all assets in my own name, because in my circumstances it works out best.

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ReXXar said:

I began buying stocks from last September and I now want to rotate into cheaper stocks, but I'll incur a huge tax bill if I sell (more than 35%, tax is more than my day job wages for the whole year), so I'm trying to hold for next two months until September to cut the capital gains tax in half.

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cutz said:

Set up a collar using Sep expiry options to protect your position till September.

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