How does selling shares affect Average Cost Basis (Tax-return)

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(Newbie)Newbie

19 Oct 2024

I have a quick accounting question relating to the Average-Cost-basis method for my tax-return. If I sell a partial amount of shares does that affect my cost base later on?

e.g.,

Day 1) I buy 2 shares at $5

Day 2) I buy 2 shares at $10

Day 3) I sell 3 shares at $15

Day 4) I buy 2 shares at $20

When calculating my Average cost-basis at day 3 I understand that it'd be $7.5 per share = ($5x2)+($10x2) / 4

But how would I calculate my Average cost-basis per share on day 4? Is it just ($5x2)+($10x2)+($20x2) / 6 = $11.67 per share or is the fact that I sold 3 of my shares relevant?

Alternatively would the average cost basis be the 1 unit of $7.50 left and the 2 units of $20 so ($7.50 + $20x2)/3 = $15.83 per share?

Any help would be appreciated, thanks.

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knaresbro

(Devotee)Devotee

19 Oct 2024

The ATO allows average cost to be used in limited circumstances, @potato5312 , and the example you've provided (with bundles purchase on different days) isn't one of them. You have four separate bundles, each with a separate cost base.

See this ATO page for details.

https://www.ato.gov.au/forms-and-instructions/capital-gains-tax-guide-2023/part-a-about-capital-gains-tax/investments-in-shares-and-units