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Q:

Hi just wanting to know if got shares for free and have now sold them for about $16000 what are the capital gains implications what is my cost base is it nil? Also I probably qualify for 12mths discount on the gain. Thanks in advance for your answers.

3 months ago

Responses

Hi Pal

Short answer: You will need to include $8,000 as capital gain income in your tax return. This will get added to your other income and you will have to pay tax on that.

Long answer: You would have made a capital gain of $16,000 and as you held the shares for more than 12 months you are eligible for for a 50% discount. This means you only have to pay tax on half the amount i.e. $8,000. Capital gain tax is not a separate tax and thus the capital gain you make gets added to your tax return and increases your taxable income. The tax you pay would depend on your other income.

Hope this helps.

3 months ago

Thanks heaps thats what I thought so. Thanks once again for your quick response.

Hi Pal,
There is another possibility. Why were the shares free? If they were allotted to you as a member of a mutual such as AMP or Colonial etc then the Tax Office would have provided a cost base for the shares at the time of allocation. Also if they were given to you in lieu of wages or payment for your work or service then they would also be taxed differently.
Check with an accountant the specifics of the shares you were given and see if any other ruling applies
Cheers
Scott


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