No CGT on Shares?

• 29 November 2004

• #1

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cannox

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Gday all,
I have heard that there is a loop hole with paying CGT on profit from shares. Apparently if you are trading in a company that exclusively trades on the stock market then due to the fact that the company's business is trading, company tax is payed in preference to CGT. Is this true or does anyone else know of other such startegies?

 

• 29 November 2004

• #2

wayneL

VIVA LA LIBERTAD, CARAJO!

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Yes this is true.

Also if you are trading as an individual, and classified as a trader by the ATO, then PAYG income tax applies rather than CGT.

Cheers

BTW I am not an accountant, get professional advise etc etc etc

 

• 29 November 2004

• #3

GreatPig

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cannox said:

company tax is payed in preference to CGT

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Income tax is paid instead of CGT in that situation. They are both part of company tax.

But I don't see how that's a loop-hole. A company pays tax on both income and CGT at the same rate of 30%. You're no better off in terms of the tax rate.

And you need to convince the ATO that your trading really is a business if you want to offset losses against other income (if there is any). It's not just a simple matter of you saying you're running a business.

I'm no accountant either, so seek professional advice before proceeding.

Cheers,
GP

 

• 29 November 2004

• #4

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cannox

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Thanks for that infor guys. The reason I would prefer to pay Company tax of 30% over CGT of 30% is indeed that I can offset the loss against company expenses.

I have heard that there are many little 'tricks' when it comes to trading within a company that can save you a lots of money... if anyone knows anymore please post them. :santa:

 

• 29 November 2004

• #5

GreatPig

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cannox said:

I can offset the loss against company expenses

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You can only offset losses against income. Expenses are another outgoing that will just add to the loss.

If the business is pure share trading, then the only other income I could see that you might have would perhaps be from dividends and interest on bank deposits.

Cheers,
GP