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calculating the cost base for a partial sale of shares

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I purchased 10,000 shares and have now sold 8,000 for a capital gain.

When working out the cost base for the shares sold do I apportion the acquisition costs by 8/10. For example $7,000 x (8/10) to find the cost base for the shares sold? 

 

I also incurred brokerage fees on the same date. Would this also have to be apportioned for reflect the 8000/10000 shares sold? 

 

Thank you!

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ATO Certified Response

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Hi @LT

 

Thanks for your question.

 

The short answer is yes. For most capital gains tax (CGT) events, your capital gain is the difference between your capital proceeds and the cost base of your CGT asset.

 

The cost base of a CGT asset is generally the cost of the asset when you bought it, plus certain other costs associated with acquiring, holding and disposing of the asset. The cost base of a CGT asset is made up of five elements.

 

For more information about the five elements of the cost base and reduced cost base, have a look at our website.

 

The acquisition costs and brokerage fees make up part of the second element of the cost base (incidental costs of acquiring the CGT asset or that relate to the CGT event).

 

If a CGT event (e.g. sale of a CGT asset) happens to only part of a CGT asset, the cost base or reduced cost base of the asset is generally apportioned to work out the capital gain or loss from the CGT event. This is called apportionment.

 

For more information about apportionment, refer to the modifications and interaction with other rules page.

 

In your case, the way that you would apportion the acquisition costs and brokerage fees are exactly as you have described. If 80% of the shares have been sold, you can include 80% of the acquisition costs and brokerage fees in the cost base calculation.

 

Hope this helps.

 

Thanks,

 

ChrisR

1 REPLY 1

Most helpful response

ATO Certified Response

ATO Community Support

Replies 0

Hi @LT

 

Thanks for your question.

 

The short answer is yes. For most capital gains tax (CGT) events, your capital gain is the difference between your capital proceeds and the cost base of your CGT asset.

 

The cost base of a CGT asset is generally the cost of the asset when you bought it, plus certain other costs associated with acquiring, holding and disposing of the asset. The cost base of a CGT asset is made up of five elements.

 

For more information about the five elements of the cost base and reduced cost base, have a look at our website.

 

The acquisition costs and brokerage fees make up part of the second element of the cost base (incidental costs of acquiring the CGT asset or that relate to the CGT event).

 

If a CGT event (e.g. sale of a CGT asset) happens to only part of a CGT asset, the cost base or reduced cost base of the asset is generally apportioned to work out the capital gain or loss from the CGT event. This is called apportionment.

 

For more information about apportionment, refer to the modifications and interaction with other rules page.

 

In your case, the way that you would apportion the acquisition costs and brokerage fees are exactly as you have described. If 80% of the shares have been sold, you can include 80% of the acquisition costs and brokerage fees in the cost base calculation.

 

Hope this helps.

 

Thanks,

 

ChrisR