Hello,
I previously traded shares on the market regularly and treated them on revenue account. My portfolio has now changed and I plan on holding the investments long term and receiving dividends from the shares i now on.
To account for this movement I would like to confirm if the following assumption for my tax is correct:
Opening trading value at lower of cost/market value $200,000
Deemed sale of shares at original cost - $150,000 - 1/7/22
Trading loss for the sale of shares ($50,000) deductible
Share value now on capital account at cost - $150,000.
If i was to sell these shares before 1/7/23 i would lose the benefit of the discount as 1/7/22 now becomes the share purchase date.
or does the market value substitution rule need to be used:
Opening value of shares at lower of cost or market- $200,000
Deemed market value of shares using market substitution rules - $400,000 at 1/7/22
Revenue gain - $200,000
CGT cost base - $400,000. CGT purchase date would be 1/7/22 and any shares sold would lose discount within 12 months.
I have read this forum and there is conflicting answers between the 2 ATO replies of using cost or MV substitution.
https://community.ato.gov.au/s/question/a0J9s0000001FMSEA2/p00035355
One states market value substitution rule and the other original cost base should be the consideration for the sale of the shares.
This link here says you use cost base so my first method would be correct - https://www.ato.gov.au/individuals/capital-gains-tax/shares-and-similar-investments/share-investing-versus-share-trading/
Any help you can provide would be most appreciated.
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