Losses arising from the disposal of shares (or other assets) held for investment purposes are capital losses.
A capital loss cannot be offset against income from other sources but must be offset against capital gains and may be carried forward to offset against future capital gains.
Example
In the 2005-06 financial year, Abbey decided to invest in the stock market for the first time and purchased 1,000 shares in Lorca Enterprises at $25 per share.
In the 2006-07 financial year, she sold 200 shares for $35 each and she included the capital gain when working out her net capital gain for her 2007 tax return.
In the 2007-08 financial year, she didn't buy or sell any shares and received dividends for the remaining 800 shares.
In the 2008-09 financial year, Abbey decided to sell all her shares. The market price when she sold was $13 per share.
Abbey has realised a capital loss. Her previous behaviour indicates that she held the shares for investment purposes and was not in the business of share trading.
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