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How to calculate tax when selling stock in a Pty Ltd

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I've recently started a Pty Ltd. The primary activity of the company is share trading and investing. The company was registered as having 100 equal shares. I own all of them with the intention of selling these shares, the cash from the sale of the shares is loaned to the company on a zero fee basis. The idea being that the company will engage these funds in trading activity and the shares will be purchased back at a later date for more.

My question is; as I have technically sold shares and realised a personal gain, what tax do I pay on these? How do I calculate this tax? 

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Most helpful response

Devotee

Replies 0

There's 2 portions here.

 

1. The starting equity in the company (eg. you put $100 cash into the company, and theres $100 in shareholder capital - equity). The company can use this $100 however it likes. This equity contribution is not a loan.

 

2. You (as the individual) have a capital investment in the company (eg.100 shares at $1 each = $100 = cost base). If you sell those shares, then you get a capital gain or loss based on how much you sold them for less your cost base. Of course, you also need to keeping in mind the market value substitution rule if you are not disposing them at arm's length.

 

I'd also say that you should be mindful that the share trading is not caught on capital account since companies dont get the 50% CGT discount.

 

1 REPLY 1

Most helpful response

Devotee

Replies 0

There's 2 portions here.

 

1. The starting equity in the company (eg. you put $100 cash into the company, and theres $100 in shareholder capital - equity). The company can use this $100 however it likes. This equity contribution is not a loan.

 

2. You (as the individual) have a capital investment in the company (eg.100 shares at $1 each = $100 = cost base). If you sell those shares, then you get a capital gain or loss based on how much you sold them for less your cost base. Of course, you also need to keeping in mind the market value substitution rule if you are not disposing them at arm's length.

 

I'd also say that you should be mindful that the share trading is not caught on capital account since companies dont get the 50% CGT discount.