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frogbat(Newbie)Newbie
10 Oct 2022

hi all


i sold some stock then repurchased it to average down.


I am an amateur investor. I told someone about this and they said it was illegal and called a Wash Sale.


I had no idea what wash sale was. After reading the ATO rulings now I know what a wash sale is.


My reason for selling then buying was to average down. Way to early in the year to kow what any CGT or Loss may be.


My Questions are:


1.If I do not claim the loss from the sell and repurchase - is that ok ?


2.can I add that loss to the cost base of the repurchase of the srtock ?


3.can I carry over the loss to the next year ?


thanks

Anthony

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4,322 views
2 replies

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Most helpful reply

CaroATO(Community Support)Community Support
13 Oct 2022

Hi @frogbat,


I'm pleased you've had a look at the wash sale information.


If it's viewed that it was a wash sale and you obtained a tax benefit then this could be cancelled. You may want to consider getting professional advice about your transaction.


A capital loss can't be added to the cost base of the stock you repurchased. A genuine capital loss can be carried forward indefinitely but must be offset against a capital gain at the first opportunity.


Check out the information in TR2008/1 about wash sale arrangements if you haven't already. Our website has further details about calculating CGT and carrying forward a capital loss.

All replies

Most helpful reply

CaroATO(Community Support)Community Support
13 Oct 2022

Hi @frogbat,


I'm pleased you've had a look at the wash sale information.


If it's viewed that it was a wash sale and you obtained a tax benefit then this could be cancelled. You may want to consider getting professional advice about your transaction.


A capital loss can't be added to the cost base of the stock you repurchased. A genuine capital loss can be carried forward indefinitely but must be offset against a capital gain at the first opportunity.


Check out the information in TR2008/1 about wash sale arrangements if you haven't already. Our website has further details about calculating CGT and carrying forward a capital loss.

frogbat(Newbie)Newbie
13 Oct 2022

After reading the ruling it is clear that one of the requirements for it to be deemed a wash sale is to claim the capital loss after selling and immediately buying the same stock.


Therefore, if i sell and buy immediately the same stock, and NOT claim the loss.. In other words simply wear the loss and never claim it, it is NOT a wash sale..


I'm happy to do that as often as I see necessary..


Thanks

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What is the tax treatment of a wash sale - carry over tax loss? | ATO Community