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  • Identifying when shares or units are acquired

    When disposing of only part of an investment bundle of shares or units, you need to be able to identify which ones you've disposed of – as shares or units bought at different times may have different costs and this will affect the amount of your gain or loss.

    If you sell some of your investments in a particular company or unit trust, the parcels of shares or units you bought at different times may need to be identified. For example, if you bought some of your investments for $5.00 each and some for $10.00 each, then when you dispose of some of those particular shares or units you need to select to what extent you were selling the $5.00 investments or the $10.00 investments.

    Example: Identifying when shares or units were acquired

    Boris is an investor who accounts for his investments under the CGT rules. He bought 1,000 shares in WOA Ltd on 1 July 2018 for $5.00 each. He bought another 3,000 shares in the company on 1 July 2019 for $10.00 each.

    Boris sold 1,500 of the shares on 1 January 2020 for $8.00.

    Boris must decide which investments he is selling and which he is retaining. Boris decides that he will sell 1,500 of the shares that he bought in July 2019 in order to claim a capital loss in the 2020 year. As a result, Boris will still have:

    • 1,000 shares with a cost base of $5.00
    • 1,500 shares with a cost base of $10.00.

    If Boris later decides to sell more WOA Ltd shares he can choose which shares he is selling based on what shares he still had left after his sale of shares in January 2020. Boris needs to keep records of which shares he has bought and sold in order to prove that he has calculated capital gains tax correctly on any sales of shares.

    End of example
    Last modified: 01 Jul 2020QC 52206