CGT when Buying and Selling Shares

How Capital Gains Tax (CGT) affects shares and units

For CGT purposes, shares in a company or units in a unit trust are treated in the same way as any other CGT assets.

As a general rule, if you acquire any shares or units on or after 20 September 1985, you may have to pay tax on any capital gain you make when a CGT event happens to them. This would usually be when you sell or otherwise dispose of them. It also includes where you redeem units in a managed fund by switching them from one fund to another.

Profits on the sale of shares held in carrying on a business of share trading are included as ordinary income rather than as capital gains.

A CGT event might happen to shares even if a change in their ownership is involuntary – for example, if the company in which you hold shares is taken over or merges with another company, this may result in a capital gain or capital loss.

A CGT event also occurs if you:

• Receive non-assessable payments from a company;
• Receive non-assessable payments from a trust; or
• Own shares in a company that has been placed in liquidation or administration and the liquidator or administrator has declared the shares (or other financial instruments) worthless.

There are a number of special CGT rules if you receive from a company or trust such things as:

• Bonus shares;
• Bonus units;
• Rights or options to acquire shares or units; or
• Non-assessable payments.

Special rules also apply if you buy convertible notes or participate in an employee share scheme or a dividend reinvestment plan.

Our dedicated team can assist you with queries relating to how Capital Gains Tax affects your shares. Complete and submit the Express Enquiry form or call us on +61 2 9223 9166 to arrange an appointment.