When an individual buys and sells shares their trades are treated differently based on if they are considered a trader or investor. As an investor their purchases and sales are not considered expenses and profits but assets subject to capital gains. I cannot find similar info for businesses. If I invest via my business, can the trades also be treated as capital/assets and not income/expenses?
Right, that was my next question. So as a company I cannot get 50% discount on CGT like an individual can?
No - not the 50% discount for owning the asset for 12 months
The last bullet reference to the CGT discount confused me. It implies a business can use the individuals GCT discount even after the concessions?
Because a "business" could also be a sole trader, partnership or trust.
Active asset <-- Active asset says share investment do not qualify unless more than 80% of the company assets are in active assets, financial instruments, or cash, which they would be
Listed shares held for investment are not active assets.
So from your perspective, does this mean I can apply both CGT Discount and 50% small business concession, or only the 50% concession, or neither?
If investment shares are held in a company, then no discount at all - listed shares will not be an active asset.
If the company is a share trader, CGT does not apply because the shares are trading stock.
Whether you are a trader or investor depends on the facts, not the entity buying the shares - except for SMSF where all share transactions are for CGT, by law.
Thanks Bruce. That was the link I included in my post as well. My only confusion with that page is it is listed under the "individual" section and nothing like that is found under the "business" section. So you are sure it still applies?
So you are sure it still applies?
Yes.
Most people would not buy investment shares in a company, because there is no 50% discount for CGT assets owned by companies.
Right, that was my next question. So as a company I cannot get 50% discount on CGT like an individual can?
Reading the "CGT concessions eligibility overview" for businesses is a little confusing on this point. On the page linked it says:
There are rules about the order you apply:
The last bullet reference to the CGT discount confused me. It implies a business can use the individuals GCT discount even after the concessions?
Also, on this page, down the bottom, on step 4, it says "If you are eligible for the CGT discount, reduce the remaining capital gain", creating more confusion. And it is also included in the example at the bottom.
With regard to the small business concessions, as far as I can tell I can at least apply the active asset concession and hope you can confirm your thoughts.
The conditions include:
(1) Having less than $2M turnover <-- I would qualify for this
(2) Active asset <-- Active asset says share investment do not qualify unless more than 80% of the company assets are in active assets, financial instruments, or cash, which they would be
(3) Share additional conditions <-- I would qualify as a small business under the max net asset value of $6M
(4) not a partnership, so I qualify
So from your perspective, does this mean I can apply both CGT Discount and 50% small business concession, or only the 50% concession, or neither?
Appreciate your thoughts.
Right, that was my next question. So as a company I cannot get 50% discount on CGT like an individual can?
No - not the 50% discount for owning the asset for 12 months
The last bullet reference to the CGT discount confused me. It implies a business can use the individuals GCT discount even after the concessions?
Because a "business" could also be a sole trader, partnership or trust.
Active asset <-- Active asset says share investment do not qualify unless more than 80% of the company assets are in active assets, financial instruments, or cash, which they would be
Listed shares held for investment are not active assets.
So from your perspective, does this mean I can apply both CGT Discount and 50% small business concession, or only the 50% concession, or neither?
If investment shares are held in a company, then no discount at all - listed shares will not be an active asset.
If the company is a share trader, CGT does not apply because the shares are trading stock.
Thanks heaps for clarifying Bruce!
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