If you have a capital gain, then by creating a loss you may be able to cancel it out. True, losing money to get a tax break is self-defeating. But if, for example, you have a dud share why not sell it for the tax break? If you think it still has potential, buy it back the next day.
Sydney Morning Herald
It took me a moment to grasp the idea. But it's pretty crazy. If you have a reasonable sized portfolio of highly variable stocks (or any asset) you can basically put off paying any capital gains tax for as long as you like. The timing is mildly tricky, but it would be enormously useful in smoothing out "profits". I can't believe it's legal. And I'm suprised SMH were happy to publish it.
I'm reading about the history of capitalism and imperialism at the moment. It's made me a little prone to sudden bouts of moral anxiety.
I don’t understand. Can you explain it to me one day? At Barmuda’s preferably :)
Jem / 6:02pm / 4 June 2005
Because the government looks at your overall (net) capital gain, and not total positive gain, it can appear that you haven’t made any money, when you’ve actually made some and then lost some. Eventually you will have to pay tax on it, but being able to postpone paying tax for as long as you want is pretty valuable.
Ryan / 6:19pm / 4 June 2005