Investments | Sydney Financial

Take care when declaring a capital loss or gain on shares. ATO ‘wash sale’ rule

Share investors need to take care when declaring capital gains and losses, being particularly mindful of the Australian Taxation Office’s ‘wash sale’ rule.

Investors who have incurred large capital losses on shares can use those capital losses to offset any capital gains they have realised. Any unused losses can be carried forward to offset capital gains in future years, without a limit on how long they can be carried forward. Though capital losses from shares can’t be used to reduce your taxable income, just the capital gains you declare.

The ‘wash sale’ rule

This describes the quick sale and re-purchase of securities to minimise tax. “The sort of transactions that the ATO is watching closely are those that generate a tax benefit where a benefit would not have ordinarily been available if the transaction wasn’t entered into in the first place,”

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