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Re: Cost Base of Matched Shares

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Newbie

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Replies 5

Hi All,

I'm trying to work out what the Cost Base of my matched shares should be.

The company I work for you can buy shares each year worth upto $2000 and after 1 year they will match these shares 1 for 1

 

I can't see to find any reference to this,

Do i use the sharemarket price when they vest or do i use the same price as what they were bought for a year earlier.

 

Thanks

1 ACCEPTED SOLUTION

Accepted Solutions
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Best answer

Taxicorn

Replies 2

@isbrodie1 

Sounds like they may just be "Bonus Shares".

 

The bonus shares are subject to capital gains tax if they were issued on or after 20 September 1985.

The bonus shares are acquired when the original shares were acquired.

The cost base of each original and bonus share is equal to:      

  the cost base of the original shares divided by the total number of original and bonus shares, plus

   any calls on partly paid bonus shares.

 

If you are unsure then seek professional advice and or a private ruling from the ATO which is free.

5 REPLIES 5
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Best answer

Taxicorn

Replies 2

@isbrodie1 

Sounds like they may just be "Bonus Shares".

 

The bonus shares are subject to capital gains tax if they were issued on or after 20 September 1985.

The bonus shares are acquired when the original shares were acquired.

The cost base of each original and bonus share is equal to:      

  the cost base of the original shares divided by the total number of original and bonus shares, plus

   any calls on partly paid bonus shares.

 

If you are unsure then seek professional advice and or a private ruling from the ATO which is free.

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Newbie

Replies 1

Hi Macfanboy,

 

Yes, they do look like Bonus shares, although the company provides a tax statement each year for the matched shares and this is to be included in my tax return as income.

 

The statesment works out the price of the matched shares as the current price when they vest.

Seems rough to pay tax on the full value, but have the cost base effectivly zero when working out captital gains.

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Devotee

Replies 0

Sounds like you got shares under an Employee Share Scheme (ESS).

 

Generally if you receive shares via ESS:

Cost base = what you reported per the ESS tax statement. Eg. you received shares worth $12,000. You record $12,000 as income under Label 12 of your income tax return. That $12,000 is the cost base which you use to calculate your capital gain.

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Community Support

Replies 1

Hi @isbrodie1

 

Thank you for your post and welcome to our community.

 

Macfanboy's suggestion of Bonus shares or a private ruling may be the way. Another is search our website ato.gov.au to see if there is any ruling or information on how the shares may be viewed.

 

 Alternatively see Employee share schemes it may offer some other insights.  However your employer should be able to offer direction. If it sits under an Employee share scheme they would have had to get approval for any special treatment.

 

 

I hope that gives you some options.

Regards
MarkA

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Newbie

Replies 0

Thanks for the input guys, I'll have a chat to my employer.

If not, I'll seek a private ruling
Cheers