In 2006 while living in Singapore I transfered money from a joint account unnder mine and my wife's name to a broker in Malaysia and setup a share account however the account was under my name. The shares have grown in value and I have also received Employee Shares which have been added to the account and I have paid the said tax. I want to transfer nearly all shares to my wifes name but have been advised that the account being in my name; the tranfer will come under a Capital Gains Scenario.
My question is that if the original funds came from both myself and my wife; is it still realised as Capital Gains?
Appreciate your thoughts
Thanks for getting in touch! Capital gains tax isn't a separate tax - it's actually a way to work out whether you've made a gain or loss on certain assets. Once you've figured out your gain or loss, you add the final amount in with the rest of your income and pay tax on the total income.
Shares are considered to be capital assets, so CGT applies when you dispose of them. Disposal can occur a few different ways, including when you change the ownership of your shares - for example, when the name on the share registry changes from one name to another.
If you've 'gifted' your shares to your spouse, you're usually considered to have received the market value of the shares at the time you gave them away. You'll work out whether you've made a gain or a loss on the shares between the time you acquired them and the time you disposed of them.
In some circumstances, you may be entitled to a discount on any capital gain you make; if you make a capital loss, you're able to carry that loss forward to reduce any capital gain you may have in the future.
If you do have a net capital gain, you'll add this back in with the rest of your taxable income and the standard tax rates will apply.
Thanks for the below. I still cannot understand why I have to realise a Capital Gains when I transfer shares to my wife. We are one as a family so my shares are hers and visa versa. How can there be CGT when I transfer but do not realise any monatary value from the transfer? Can I transfer at cost base? Basically all I see is that upon tranferring shares to my wife without actually selling the shares and attaining cash then I am paying a hefty tax for no gain?
Thanks for following up. We can only provide general information about capital gains tax here on Community. If you believe your situation is different, you can ask us to provide our opinion on how we think tax law applies to personal circumstances in a private ruling.
Private rulings are a free service, and we usually reply within 28 days of receiving your request.