Let's say for example I purchase 100k of stock 5 years ago.
But then I buy 10k more of same stock 6 months ago.
Now I want to sell 50k.
Do I loose the owned over 12months cgt tax discount because I topped up?
Paying tax on selling shares. CGT free?
t_c on 22/08/2024 - 06:27
Last edited 22/08/2024 - 06:28
Last edited 22/08/2024 - 06:28
Comments
Don’t necessarily have to sell off on a FIFO basis. You can pick your cost base
Nowhere did Scrambledeggs mention FIFO or LILO.
You can apportion your sell off to what you bought.
They didn't, but they did say [emphasis mine] "you apportion the sell-off to the initial buy-in".
Other readers may take this "initial buy-in" to imply FIFO.
@brad1-8tsi: So did I. But the fact that bemybubble even made that comment shows that some may read it as FIFO, rather than purely cost basis (which in the example given is the initial buy-in). This thread clarifies that for those readers.
Sell the ones that will give you the smallest capital gain. If the shares you bought 6 months ago are down then selling those will give you a capital loss, this can offset the gain on the older shares.
Do I loose the owned over 12months cgt tax discount because I topped up?
To keep it simple, think of each share as its 'own' transaction, not the total transaction at the time of purchase.
So if you sell $50k worth, say 5,000 shares out of the 25,000 you own, you select which shares you wish to sell from, and do the calcs on them etc.
So if you got them 5 years ago for $2 each, and sell them today for $10 each, you made a gain of $8, of which 50% is CGT free, so your CGT event on your tax return would be $4 x 5000 shares = $20k taxable
You can mix and match as well. The ones you got 6 months ago can be sold too, if they are not in profit or very little, you might be better to sell them even with no 50% CGT discount as your overall taxable event might be less.
When filling in the capital gains record in MyTAx you treat them as 2 separate sales.
Assuming $90k 5 years back and $10k 6 months ago. Both sold for a total $200k.
Entry 1: $90k with purchase date dd/mm/2019 and sale price $180k on dd/mm/2024 = $90k CG and then 50% discount applied
Entry 2: $10k purchased dd/mm/2024 and sale price $20k on dd/mm/2024 = $20k CG no discount
No, you apportion the sell-off to the initial buy-in.
It becomes very complicated if you sell and buy shares very often, you need to keep meticulous records of purchase and sell dates, but in your simplified example it is very easy.