Last minute tax loss battered bargain bin.

[flower]

It's not unreasonable to expect a pick up in tax loss selling for the next 9 days--bargains aplenty--depending on world events.

[mistagear]

In Reply To: arty's post @ Jun 3 2010, 02:26 PM

If a trader stuck to a consistent strategy

Hell.... I'm in trouble.... "consistent" you say... geez

[arty]

In Reply To: sirob's post @ Jun 3 2010, 02:12 PM

No argument there, Sir;
the point I tried to make was about "patterns of behaviour":
If a holder would only - or predominantly - sell duds in June, while hanging on without stop-loss for most of the other time, the ATO would smell a rat.
If a trader stuck to a consistent strategy: buy low, sell high, stop loss - the ATO's clever data mining programs wouldn't even trigger.

[sirob]

In Reply To: arty's post @ Jun 3 2010, 12:43 AM

Specifically, that would mean that a trader can more easily "time" any sales because he is quite regularly selling stock for profit (or, if he is smart, to limit losses). Whereas a share holder would become conspicuous when, just "coinciding with tax-time", he discovers that he has some duds (as 99% long-term holders may indeed have) which he just so happens to wish to offload.

Hello arty,
Whilst I basically agree with your reasoning it is my understanding that a trader or an investor can sell a loss making stock any time he so chooses and can come up with a range of reasons if queried by the tax office as to the timing and motives and not a thing the taxation dept can do. However if the trader immediately purchases them back that would be much harder to explain and the taxation dept would no doubt say that was deliberately creating a tax loss and would be hard to deny. Should you wish to buy back make sure that you allow a reasonable time between sell and buy and that you can explain the reason for re purchase.

[flower]

In Reply To: arty's post @ Jun 3 2010, 12:43 AM

"While the Tax Office considers each case on its individual features"

[arty]

Rather than making assumptions based on dubious blog sites and personal prejudices, why not go to the authoritative source and let the ATO explain the difference between trader and investor:

http://www.ato.gov.au/businesses/content.a...m&page=1#H1

In particular, it states:

The difference between a share trader and a share holder
The way in which income and expenditure are dealt with in relation to shares varies depending on whether you are a share trader or a share holder.

While the Tax Office considers each case on its individual features, in summary a share trader is a person who carries out business activities for the purpose of earning income from buying and selling shares. This person's position may be briefly summarised as:

• receipts from the sale of shares constitute income
• purchased shares would be regarded as trading stock
• the nature, regularity, volume and repetition of the share activity are consistent with those of a share trading business
• costs incurred in buying or selling shares are an allowable deduction in the year in which they are incurred, and
• dividends and other similar receipts are included in assessable income.

A share holder is a person who holds shares for the purpose of earning income from dividends and similar receipts. This person's position may be briefly summarised as:

• the cost of purchase of shares is not an allowable deduction, but is a capital cost
• receipts from the sale of shares are not assessable income – however, any net profit is subject to capital gains tax
• a net loss from the sale of shares may not be offset against income from other sources, but may be carried forward to offset against future capital gains made from the sale of shares
• costs incurred in buying or selling shares are not an allowable deduction in the year in which they are incurred, but are taken into account in determining the amount of any capital gain
• dividends and other similar receipts are included in assessable income, and
• costs (such as interest on borrowed money) incurred in earning dividend income are an allowable deduction at the time they are incurred.

Specifically, that would mean that a trader can more easily "time" any sales because he is quite regularly selling stock for profit (or, if he is smart, to limit losses). Whereas a share holder would become conspicuous when, just "coinciding with tax-time", he discovers that he has some duds (as 99% long-term holders may indeed have) which he just so happens to wish to offload.

[flower]

Hi Flower
Could you please elaborate on the concept of "tax loss selling ...."
thanks Chum
------------------------------------------------------------------------------------------

Hi Chum, contrary to what some may think the vast proportion of participants in the stock market are not traders, mind you that does depend on what you term as "traders." So at times they deem it prudent to employ some legal CGT tax liability reduction strategies.

Some figures from a site I accessed some time ago, can't remember where I found it even--but this is the breakdown in percentages of all market participants.

Short term trader: (0-12months).. 44%
Medium Term investor (1-5years). 30%
Long Term investor (5+ years)......8%
"Other".....................................10%
Momentum Trader........................5%
Day Trader................................3%
Scalper.....................................0%


Let's make an assumption, that somebody in the largest % (0-12months) bought into an IPO that listed last August and he made a veritable killing resulting in a hefty CGT liability this tax year, since he has sold out within twelve months.

It follows that he would very likely be sitting on a few current day lemons since he isnt a day trader, so he sits down with his accountant and decides how to minimise his 2010 CGT liability. His likely rationale would have been he either paid a thumping big tax bill or dumped lemons or if he had no outright lemons he dumped the ones he was losing money on and paid no tax. (99% of market participants would be nursing some losers right now!)

Accountant advises him to dump emough of his under water stock to reduce or maybe even eliminate his 2010 CGT tax liability.

Other interesting stat to come out of this chart was--number of trades per week (dont know how old this chart is)

50 trades per week..=6%
20-50...................=2.9%
5-10.....................=13%
1-5.......................=43%
0-1......................=35%

[mpl]

In Reply To: flower's post @ Jun 2 2010, 03:47 PM

Flower

So: In 21 days time will we see wholesale SLAUGHTER---or Bargain Basement Time??

SO ?. Who cares ?.

No doubt some really good bargin basement buying will be there if that happens. Personaly can not wait

But only for those traders/investors who had the Foresight to exit earlier positions based on Chartage eh?.

Cant wait to Short the way down as well.

[flower]

3 years on from the last post in this thread and here we go again.

It's probably very likely all good solid profitable resource businesses has been battered /even decimated by the last four week's happenings, and if things carry on like this for another 3 weeks many companies will be trading at less than 50% of their valuation.

So: In 21 days time will we see wholesale SLAUGHTER---or Bargain Basement Time??

[Barra]

[QUOTE=ricky99,Thursday 28/06/07 06:25am ] [It hasn't moved much of late]





G'day Ricky

SAE up 16.67% today

Will lock it in at todays low of 42c .

R/ds

Barra