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Selling shares in a private company to a family member

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Hello, 
I bought $20k worth of shares in a private start-up company.  The projects that the company had been involved in developing, did not come to fruition and are no longer being continued with. The group has no potential revenue and no willing investors. 

 

I would like to claim a tax loss on this investment, however I have no contact with any of the Directors or any other shareholders as the business has effectively been abandoned.

Can I sell these shares to my wife or family member for $1 and claim at $19,999 tax loss that year? Are there any implications with this?

Happy to hear any other recommendations to best deal with this!


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Hi @mperkes,

 

Thanks for getting in touch!

 

If the company has appointed an administrator they can declare that the shares are worthless and you may be able to claim a capital loss. This information is often available on the corporate website or the administrator will ordinarily notify shareholders.

 

If not and you can legally sell your shares, and choose to sell them, a CGT event will occur and you will likely incur a capital loss. A capital loss is available to be offset against current or future year capital gains. It cannot be applied against your other income. The amount of your capital gain or loss is worked out by including the amount that you receive for sale of the shares, as reduced by any amounts paid for purchasing them. However, if you have obtained a tax deduction in respect of your investment then this would reduce the amount of any capital loss accruing.

 

If you have a capital loss and do not have any capital gains against which to offset, you can carry forward the capital loss to future years.

 

If you have further questions regarding your situation, you can contact our Early engagement team by submitting a request form or requesting a call back and an someone will contact you to discuss further.

 

Thanks, JodieH.

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Best answer

ATO Certified

Community Support

Replies 2

Hi @mperkes,

 

Thanks for getting in touch!

 

If the company has appointed an administrator they can declare that the shares are worthless and you may be able to claim a capital loss. This information is often available on the corporate website or the administrator will ordinarily notify shareholders.

 

If not and you can legally sell your shares, and choose to sell them, a CGT event will occur and you will likely incur a capital loss. A capital loss is available to be offset against current or future year capital gains. It cannot be applied against your other income. The amount of your capital gain or loss is worked out by including the amount that you receive for sale of the shares, as reduced by any amounts paid for purchasing them. However, if you have obtained a tax deduction in respect of your investment then this would reduce the amount of any capital loss accruing.

 

If you have a capital loss and do not have any capital gains against which to offset, you can carry forward the capital loss to future years.

 

If you have further questions regarding your situation, you can contact our Early engagement team by submitting a request form or requesting a call back and an someone will contact you to discuss further.

 

Thanks, JodieH.

Newbie

Replies 1

Thanks @JodieH - what about selling to someone that is not an arms length away? e.g is there any implications with selling to my partner?

Community Support

Replies 0

Hi @mperkes,

 

Thanks for following up!

 

As there are a number of factors to consider with your query and as we'd need to know more information about your situation we can't provide a definite answer here on Community!

 

We'd encourage you to contact our Early engagement team where they can contact you via phone or email to discuss your situation and explain how they think the tax laws might apply. It's a free service, and the team aims to get back to you within 3 business days.

 

Thanks, JodieH.

 

 

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