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  • Identifying when shares or units are acquired

    When disposing of only part of an investment in 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 cost bases and this will affect the amount of your gain or loss.

    If you increase your investment in a particular company or unit trust, the parcels of shares or units you bought at different times may need to be treated in different ways. For example, when you dispose of any shares or units you acquired before 20 September 1985, any capital gain or loss you make is generally disregarded.

    If you have the relevant records from your CHESSExternal Link holding statement or your issuer sponsored statement you'll be able to nominate which shares you have sold. Alternatively, you can use a 'first in, first out' basis where you treat the first shares or units you bought as being the first you disposed of.

    Example: Identifying when shares or units were acquired

    Boris bought 1,000 shares in WOA Ltd on 1 July 2007. He bought another 3,000 shares in the company on 1 July 2012.

    In December 2012, WOA Ltd issued Boris with a CHESS statement for his 4,000 shares. When he sold 1,500 of the shares on 1 January 2019, he wasn't sure whether they were the shares he bought in 2012 or whether they included the shares bought in 2007.

    Because Boris could not identify when he bought the particular shares he sold, he decided to use the 'first in, first out' method and nominated the 1,500 shares sold be made up for 1,000 shares bought in 2007 plus 500 of the shares bought in 2012.

    Boris would also be expected to keep record of the composition of his remaining shares.

    End of example

    We'll also accept an average cost method to determine the cost of the shares disposed of if:

    • the shares are in the same company
    • the shares were acquired on the same day
    • the shares have identical rights and obligations
    • you're not required to use market value for cost base purposes.
    Last modified: 28 Jun 2019QC 52206