Loading
rogerwalker(Enthusiast)Enthusiast
10 Mar 2023


i have been a Sole trader as a business Share Trading for last 6 yrs as well as working part time job.

Last year in April 2022, I bought some AVZ shares for $A that went into a trading halt followed by a suspension at $B, they are still in suspension to this day and each month just keep getting a further 30 days extension with the hope their legal mess will get sorted.

As a consequence of this i have been unable to trade much being tied up cash wise with AVZ since that date, i am trying to figure the best way out of this mess, will the ATO automatically take away my Sole Trader status through lack of trading for this current financial year?

Or, do i get a say in this ? i would like at least to be able to claim a business loss against my other income  for this current year, if thats possible somehow. 

i have read up as much as i can on the matter but still no wiser, someone said i can make an 'off market sale' to my wife at the price on the day they first went into suspension $B, i wouldn't have a clue how to do the 'off market' sale though, if it was a possibility.

My wife is also a Sole Trader too and has loss from last year to put against this years total income, she has continued trading this year and also works part time.


One ATO agent said that i could basically choose any date during this current financial year to transition from business to investor type trading and that i would be deemed to have sold and then bought back the shares on that date back to myself at the original Cost price $A thus not generating any business profit/loss, but then from that date and price they would be a Capital asset.

this would not be ideal if true because i would not be able to put the capital loss that would eventually happen in the future against my other income. 

Other agents have given conflicting answers to this situation, so i still don't know the correct answer.

The AVZ shares may miraculously trade again before june 30th but even so would have the problem of me not meeting 'Trading as a business' requirements?



11,937 views
12 replies
11,937 views
12 replies

Most helpful response

All replies

Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
11 Mar 2023

A suspended share cannot be treated as disposed until a liquidators letter is issued.


Those letter are shown here https://www.delisted.com.au/


Action required for trader to investor is very clear - see


https://www.ato.gov.au/individuals/capital-gains-tax/shares-and-similar-investments/share-investing-versus-share-trading/


Peter_Clyne(Superuser)Superuser
12 Mar 2023

Hey @Bruce4Tax

Your link to the ATO blog page is helpful.

It includes these words :


"If your activities change from trader to investor, your shares are no longer trading stock.

At the time of the change, you treat your shares as if:

  1. just before they stopped being trading stock, you sold them to someone else (at arm's length and in the ordinary course of business) for their cost
  2. you immediately bought the shares back for the same amount."

How to find any legislative basis for this comment, or it is just opinion of ATO ?

If I'm a trader, and some of my shares have increased in value over a couple of years, I've been valuing those shares in my closing stock at cost (rather than market) each year.

So I'm having significant unrealised and untaxed gains.

After becoming an investor (and doing the pretend sell and buy thing), I'll become eligible for CGT discount after 12 months ?

Maybe I changed to investor on 1 July last year, and most of 12 months is already past.

Happy days !

  • Avatar of woman with short brown hair
Liked by rogerwalker
Malaroo(Newbie)Newbie
21 Mar 2023

I'm sure my Agent said I had to value remaining trading stock at market value on day going from trader to investor. Which I did . The explanation on the Ato site is confusing as to what they are saying. Need an example. I gave them feedback that their explanation of going from trader to investor is confusing.

  • Avatar of woman with short brown hair
Liked by rogerwalker and Peter_Clyne
rogerwalker(Enthusiast)Enthusiast
15 Mar 2023

@Bruce4Tax thanks for replying , i have already read the link you provided and was unsure how to treat the suspended shares, so i rang the ATO , 3 times actually to get the most consistent answer but all 3 were different, hence asking on this forum.

you said i can't dispose of the suspended shares , can you as one ATO rep told me, deemed to sell/buy back at original cost price with no profit or loss generated but then continue to hold from that date as Capital asset? Not actually disposing of them, just changing the holding status?

thanks.

Peter_Clyne(Superuser)Superuser
21 Mar 2023

@rogerwalker

Unfortunately, your experience of 3 different answers from ATO to same question is common.

The call centres have lowly trained staff, most of whom can only read from scripts.

Also, many of the call centres are outsourced, so you not even talking to anyone at ATO.

For anything more than answers to very simple questions, you really should have a meaningful discussion with an experienced accountant.

S/he can help you work thru the issues, and find best answer/s or solution/s.

Good luck

  • Avatar of woman with short brown hair
Liked by rogerwalker
rogerwalker(Enthusiast)Enthusiast
23 Mar 2023

@Peter_Clyne

hi Peter, i did speak to a chartered accountant and he said that i need to get a realistic market value price for the suspended shares, to which i said thats an impossibility because they are suspended, all i have is the price at which they went into suspension at.

He said that will be ok and to use that as the sell/buy price for transitioning from trader to investor (but still holding the shares), this goes against what @Brucefortax has said in his reply earlier and

as you pointed out from his link,

"If your activities change from trader to investor, your shares are no longer trading stock.

At the time of the change, you treat your shares as if:

  1. just before they stopped being trading stock, you sold them to someone else (at arm's length and in the ordinary course of business) for their cost
  2. you immediately bought the shares back for the same amount."

Not at market value.


i, like you have always used open and closing stock value as "cost" type on tax returns.

Going to try another accountant unless the ATO can come up with a Guaranteed answer that is written in stone.


cheers.

Liked by Peter_Clyne
Peter_Clyne(Superuser)Superuser
23 Mar 2023

@rogerwalker

I too have been continuing to ponder this question, and this troublesome clip from the ATO blog page at QC 66047.


"At the time of the change, you treat your shares as if:

  1. just before they stopped being trading stock, you sold them to someone else (at arm's length and in the ordinary course of business) for their cost"

It occurs to me that this statement is rubbish.

The concept of an arm's length sale in the ordinary course of business can only imply you must use the current market value, but then the same sentence says you pretend the sale is made at (historic) cost.

The quoted sentence contradicts itself !

Why would an imaginary arm's length purchaser be prepared to pay the original cost which now far exceeds any true market value ?

The ATO blog only further confirms our suspicions that they are either (a) hopelessly confused, or (b) are unable to write their blog pages clearly, or (c) all of the above.

Best you search for an accountant who you feel can give you good advice and solution.

Good luck





  • Avatar of woman with short brown hair
Liked by rogerwalker
rogerwalker(Enthusiast)Enthusiast
25 Mar 2023

hey @Bruce4Tax, thanks for your reply but i am still unclear about the share price to use on the day of transition from trader to investor (as they are still in suspension) do i use the original cost price that i initially paid for them still as in the link you provided?


ATO Certified Response
AriATO(Community Support)Community Support
ATO Certified Response6 Apr 2023

Hi @rogerwalker


We've heard back from our tech team who have had a look at this for you.


There is no single factor that determines whether you are a share trader or investor. For more information, go to Share investing versus share trading (QC 66047). Based on the information in your post, you have to determine whether the ‘Repetition, volume and regularity ‘ factor has been affected by the suspension of AVZ share on 11 May 2022.


On off market transfer, you should contact AVZ re procedure with off market transfer as well as ASIC which regulates the affairs of company.


After the end of the tax year on 30 June, you determine your tax affairs for the previous tax year. If you consider that you were carrying on a business for the whole year, you treat any shares that you had held as trading stock, irrespective of whether there was a trading halt. If you determine that you have stopped carrying on a business at a particular time you treat any trading stock at this time as being sold at its cost. (This allows for the fact that you would have obtained a deduction for their cost while carrying on a business. See section 70-110 of the ITAA 1997 for examples of how this applies.) If you had stopped carrying on a business the CGT rules would apply if you dispose of assets after you are no longer carrying on a business. The cost for CGT purposes is the same cost that you had declared on ceasing a business. 

Featured articles

Finding your TFN

6 Feb 2026 · 4 min read time

Linking your myGov account to the ATO

24 Aug 2025 · 3 min read time

Spouse details and your tax return

15 Apr 2026 · 3 min read time

Top liked users

  1. Bruce4Tax

    (Taxicorn)

    3260 likes

  2. Taxduck

    (Taxicorn)

    2069 likes

  3. PayrollDeanne

    (Taxicorn)

    816 likes

  4. YellowPotato

    (Taxicorn)

    529 likes

  5. knaresbro

    (Devotee)

    364 likes

Top contributors

  1. Bruce4Tax

    (Taxicorn)

    10399contributions

  2. Taxduck

    (Taxicorn)

    4760contributions

  3. PayrollDeanne

    (Taxicorn)

    2061contributions

  4. YellowPotato

    (Taxicorn)

    1352contributions

  5. YEP

    (Devotee)

    837contributions

Loading
how to treat suspended shares as a share trader transitioning to investor | ATO Community