Hi guys, long story short, my brother's wife wants to transfer some shares to his name, she has been holding the shares for more than 10 years
She wants to transfer some to his name, does CGT event happen during the transfer or does it only happens after the shares are sold by my brother?
My brother is in Western Australia
Thanks many
CGT applies.
Definitely CGT. Is there much difference between current market value and purchase price? Have her exchange the share's equivalent amount in cash?
Yes, its $39 at the time and now its about $70 now.
Cash is not possible as she doesnt have that much cash to give to my brother as equivalent
she doesnt have that much cash to give to my brother as equivalent
The cash would go in the opposite direction, but I assume the same issue applies.
Cash isn't required at all for an off market tfr. The CGT transaction will be assessed on market value.
Depending on individual tax circumstances, urgency and price sensitivity may be worth transferring half before 30 June and half after.
CGT will most likely arise as the she will be taken to have sold the shares at market value as at the date of the transaction. Furthermore, your brother will acquire the shares at market value on the same day. Basically it will be as if she sold the shares as per normal but no cash changed hands.
Hope this helps.
Ok so even though its not sold on the open market, CGT still applies. Thanks for that.
When you say open market, I assume you mean public market? Most things are not sold/bought on public markets (e.g. every single property market transaction). CGT applies to anything that is bought and sold as investment regardless of how it was bought or sold.
Sorry when I say open market I mean on the ASX. As this will be a transfer of signing a statement such as this one below, its not traded.
You will pay CGT, but you will not be worse off in any way. However, this might work out well for you!
Let's say wife buys share at $10 and sells it to husband at $12. Tax is levied on the $2. Husband then sells the share later at $13, tax is levied on the $1. This is exactly the same amount of tax that would be levied if wife was to hold the share and eventually sell for $13.
In other words, you pay the tax now instead of later on, but you pay no more tax. So, how does this work out well for you? Well, if your wages are going up over time, your MTR now could be lower than your MTR in the future. This means that it might be advantageous for you to realise the CGT now!
When you say YOU, you mean my brother who will pay the CGT?
Well, yes, that's what I meant.
as long as the husband held them for over 12 months.
Interesting, I didn't think of it that way.
Lucky I wasn't asking for my friend and his wife.
$39 ten years ago would be worth about $70 in todays market.
She has already been taxed on the dividends over the years and would need to speak to her tax agent for a better understanding before disposing of them if that's her concern.
Inflation is not taken into acccount
That is 100% a CGT event. The wife will need to pay CGT on whatever gains have been made.
No point transferring the shares due to capital gains tax. May as well sell on market
Also Share Registry will charge a fee. e.g Computershare $69.00, will also need to provide suitable identification to process.
Pretty sure CGT applies, may as well keep or sell when unemployed.
Could xfer to a trust and then u can pay out profits to either if they are beneficiaries , you still pay cgt on that initial xfer, but it is good for life.
transfer to trust also triggers cgt
Read my answer and you can see I stated this
haha ok sorry buddy
divorce her
there's a one off exemption to cgt for divorce asset restructuring
then remarry if you want (optional)
Many people actually do this
Not a bad loophole if you are selling a large asset. Thanks for the tip!
you're surprised?
what's legal marriage good for anyway? if a partner wants to leave you, the legal marriage is can't stop that from happening. There's literally no objective benefit of getting legally married, and several objective downsides of a legal marriage. Consider advantages of not having a legal marriage: E.g. 2 ppor cgt exemption instead of 1. E.g. couple pension < 2 single pensions. E.g. access to centrelink rorts, like you see all these lebo mums driving X5s in bankstown lining up at centrelink. Its only valid use case, barring silly things like religion and other superstitions, is if you're a gold digger.
Not financial advice but I believe no CGT between immediate family. Only if you sell to a third party.
Someone will post an ATO link soon to confirm either way.
Edit: looks like I was wrong