Year end profit taking

Crystallizing losses for year end tax gains

There will be a lot of year end profit taking and crystallizing losses before the end of financial year to make use of it for tax breaks , but it wont be as much as in normal years considering many are already bleeding.

Dividends To issue

1 July TBG Tutt Bryant Group Limited 1.5 cents
3 July PRG Programmed Maintenance Services Limited 5 cents

Oil prices pulled lower on profit-taking, one day after striking new 2009 high points on hopes of a rebound in the world’s major economies, analysts said.

The Australian dollar slipped down as some investors took profits after a week of gains, but steady demand for higher-yielding currencies kept it firm.

On crystallizing losses

If you have realised capital gains, and you have other stocks with book
losses, it makes no sense not to crystallise losses. Why pay tax this year
when you can effectively cancel it out? Next year if you only have capital
losses, ATO will not give you a refund, all you can do is to carry the loss
forward. The benefit in crystallizing losses is usually worth more than the
brokerage cost. You should choose the right time, of course – you have till
However, selling a stock and buying back the same stock and same quantity
very next instant at the same price may invite ATO’s attention if they audit
you. If they decide that you did this purely for tax reasons they can
declare it void.
You might be able to do an off-market transfer across two CHESS accounts and
save brokerage (for example, transfer out of your personal portfolio into
your SMSF), there may be a smaller transfer fee. /John wright

Benefiting from losses

With many clients sitting on unrealised capital losses, the experts believe planners should take a different approach to tax this year. The key is to take advantage of the downturn, rather than view it as a negative.

“There is an opportunity now to put capital losses in place to balance capital gains,” De Gori argued.

MLC technical services manager Andrew Lawless agreed capital losses can be beneficial if they are used to offset capital gains and limit or avoid payment of CGT.

“This strategy works anytime, but potentially it is more favourable now,” he said. “Portfolios will largely have declined and clients are likely to be sitting on losses rather than gains.”

Planners could recommend clients consider crystallising their capital losses to offset capital gains from distributions made through trading within a managed fund. The downturn also presents an opportunity to reassess the structure used to hold or purchase assets.

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Mr Symond’s plan would give first-home buyers a tax deduction of up to $4725 a year for five years on annual home loan interest repayments of $15000.

~~ Stock Picks and Stuff from JJ ~~

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