Tax Return:: Reporting Your Capital Gains/Losses

Hello, this is your tax and super specialist, P&C Tax Professionals.

Is everyone reporting the income they have generated from the sale of their shares when they lodge their tax return? These days, we have observed that a lot of people are beginning to invest in shares not just in Australia but globally around the world and this is evident through the numerous enquires we receive regarding their share investment. Generally speaking, the profit you make from selling off your shares and the income you receive from your dividends are referred to as your capital gain. This capital gain amount is also included as part of your taxable income and must be reported on your tax return.

Dividends you receive from owning Australian shares are considered your personal income as well as the profits that arise as a result of selling your shares, so you must report this income to the Australian Taxation Office (ATO) and accordingly pay taxes on the profits made.

However, as much as we would want to generate capital gains all the time, in reality, this is not the case and there will be times when a capital loss will arise as opposed to a capital gain when you dispose your shares. This capital loss is reported in the current financial year's tax return and the amount of the loss is then carried forward to the following financial year so that when you lodge your next tax return, you will be able to deduct the capital loss as an expense. This means that you can use your current capital loss to help reduce your future capital gains.

In order to report the dividend earnings you have received from holding onto an Australian share, you must provide us with your "Dividend Statement". Since you must calculate the capital gain and/or loss amount accurately, rather than simply looking at the total capital gain/loss figures, you should look at the individual BUY and SELL prices for each of your shares and ensure that you have a record of all your transactions from your respective banks, exchanges or stock broker.

Just as a handy tip, it will save you a considerable amount of time and stress later on if you regularly organise your purchase and sales history (including any brokerage fess that have been applied) using a software such as Excel.

As a final note, please make sure that you have all the documents that will be required to lodge your tax return so that when tax season comes around, you will be able to prepare and report all of your earnings and expenses as accurately and hassle-free as possible.

If you have further questions or enquires regarding the tax treatment of shares, other CGT assets or any other general questions regarding your tax and super obligations, please do not hesitate to contact us through our Official Facebook Page (P&C Tax Professionals - Australia) or direct them to our email address at pnctax@naver.com.

Thank you and bye for now!