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Capital Gains Tax between Spouses

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Newbie

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Replies 3

Hi All,

 

I have recently "transferred"shares from my name to my wifes name admittedly to reduce future CGT (my salary is higher) which has royally back-fired! So the story is originally bought shares at 11c on average, they went up in value and I believed they would continue to rise so I sold mine at 29c and had my wife buy them on the open market at 28c with the hope that my CGT would be capped at ~18c per share and my wife would then pay CGT for any further increase. Unfortunately the price has fallen to 19c and we ended up needing to sell for an owner occupied house deposit. I think I know the answer - I need to suck it up and pay CGT on the first profit made and then my wife carries forward the loss with the POTENTIAL to offset against a future win.

 

My question is - is it legal to for us to remove my first sell and my wifes first buy and treat the situation as a single CGT event? Ie - take the final total sale less the original purchase as the CGT profit? As stated I think I know the answer is not in my favour but I thought I would ask as the situation ends up being close to a net break even (given tax) if my wife does not get a future gain (due to my own bad decisions!)

 

Thanks,

Chalky

 

1 ACCEPTED SOLUTION

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Best answer

ATO Certified

Moderator

Replies 1

Hi @Chalky,

 

The capital loss made by your wife when she sold her shares cannot be used by you to offset the capital gain made on the earlier sale of your shares. There is no provision in the legislation that would allow you to treat your situation as a single CGT event.

 

If the capital loss your wife made is not absorbed by any capital gain made by her during the same income year, it is carried forward to future income years, to be offset against her future capital gains.

 

Thanks, NateH

 

3 REPLIES 3
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Moderator

Replies 0

Hi @Chalky,

 

We are going to check on this and get back to you with a response soon!

 

Thanks, NateH

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Best answer

ATO Certified

Moderator

Replies 1

Hi @Chalky,

 

The capital loss made by your wife when she sold her shares cannot be used by you to offset the capital gain made on the earlier sale of your shares. There is no provision in the legislation that would allow you to treat your situation as a single CGT event.

 

If the capital loss your wife made is not absorbed by any capital gain made by her during the same income year, it is carried forward to future income years, to be offset against her future capital gains.

 

Thanks, NateH

 

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Newbie

Replies 0

Hi Nate,

Thanks very much for your reply. That's the way I was leaning but thought I would check.

Thanks again - I look forward to keeping involved in these forums

Cheers
Chalky