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Listed shares on the ASX held in joint names are transferred to single holding in same ownership %

Newbie

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So two taxpayers hold shares on ASX , they hold in joint names so 50/50 dividends declared in individual returns. Lets say for this example its 1000 CBA shares held jointly between shareholders A & B . A & B no longer want to hold these jointly lets say it could be a brother & sister who's parents set a holding up this way or husband & wife who are trying to do an informal legal settlement. Shareholders A & B dont want to sell their shares immediately but dont want to hold them jointly any longer . They wish to transfer their 500 CBA  shares each to their own single holding in their own name. Can they do this without incurring a capital gain as no ownership has changed, nor any disposal  , they still hold 500 shares indvidually or 50% of the holding ? As it is a defined ownership as 50/50 can you confirm they would inherit the cost base of the inital purchase (at their 50%entitlement)  of the parcel plus acquisition of any shares via DRP and a capital gain would then be calculated when they physically sold their single holding in the future, not on a transfer to single holdings..  Can they keep their own records to show what has happened and shares have not been physically sold just changed from joint holding to singleholding, the same 50/50 ownership will apply on changing from joint holding to single holding. 

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Community Moderator

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Hi @ErnieLane 

 

The individual shares will be changing ownership therefore a CGT event has been triggered. There will either be a capital gain or loss.

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ATO Community Support

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Hi @ErnieLane,

 

In truth your examples are a bit mixed. If we are dealing with a marriage breakup then there is provision for a rollover and it will follow a certain process as you can note in the link attached. However if it is just a case of one or the other wishing to dispose of shares then it will be subject to a CGT event like any other disposal.

 

Newbie

Replies 1

Thak you for your response. Wondering if you can review your answer and my example as my initial question albeit confusing is not really answered. Yes CGT Rollover relief is available for marrital splits for formal legal agreements being a binding financial agreement or court order, my example specifies an informal agreement hence it is not covered by the CGT rollover reilef as informal.

  

Also neither shareholder is actually disposing of the share the shares are owned jointly , two names on the share holding as we know as a jont shareholder you declare any dividends or sales at 50/50 . They wish to transfer from a joint holdings to a single holding with no change to their holding amount.

 

The question is can joint shareholders change their shareholding from joint holding to single holding with no shares sold at this point in time ie 1000 held joinlty ( which is 500 each)  as joint, they each transfer to a single holding and still hold 500 each but they have not been sold just transferred. The shareholder still holds 500 whether it is joint or a single holding , they have not changed their ownership holding so is there an actual capital gain at this transfer point ? ( obvioulsy down the track if the single holders sells their share there is a CGT event) If this transfer point does not incur a CGT event then the inital cost base of the 500 shares still applies.

 

The reasons behind the change from joint to single holding might be as simple as one shareholders wants to dividend reinvest, the other shareholder wants the cash dividend. Or one shreholder might want to sell some at a later point, the other may not .

 

In summary can shareholder A & B who jointly hold shares transfer from a joint holding to a single holding without incurring a CGT even , after the transfer from joint to single they still hold the same amount as above, nothing has been physically sold, just transferred. 

Most helpful response

Community Moderator

Replies 0

Hi @ErnieLane 

 

The individual shares will be changing ownership therefore a CGT event has been triggered. There will either be a capital gain or loss.