Q Over the years I have built a up a reasonable portfolio of shares. Some have done extremely well and others are now virtually worthless. I would like to sell some of the low value holdings to utilise the Capital losses but I can’t work out the most cost effective way to do so. Fees with stockbrokers as a percentage of the share values are extremely high. How do I sell the shares cost effectively so I can use the Capital losses to offset other gains in the portfolio?
A The most common way to sell shares is on the share market using a broker or online broking service. A full service broker should provide you with advice on whether to sell or hold your shares. Fees are usually based on a percentage of the value of the shares. Typically a minimum fee will start from around $100 which can be expensive depending on how small the parcels are.
If you don’t require advice and are only looking to have the sale of shares executed, an online broking service may suit you. The cost of selling the shares online starts from around $15 per trade. Online comparison sites will provide a guide to features and costs of the various online broking services available.
An alternative to selling the shares is to donate the small parcels of shares to charity. Sharegift Australia is a not for profit organisation that provide shareholders with an easy and tax deductible way to sell and donate small parcels of shares. There is no cost for the service, 100% of the market value of the shares is donated to the charity nominated by the shareholder provided the charity has Deductible Gift Recipient (DGR) status. Donations of $2 or more are tax deductible to the shareholder. Sharegift can be contacted at 1300 731 632 or visit www.sharegiftaustralia.org.au.
A donation of shares is still treated as a disposal and may be subject to Capital Gains Tax (CGT). In the event of a Capital gain, CGT may be payable independent to any tax deduction received for the value of the shares on transfer. In your situation, if the transfer value is lower than the purchase cost of the shares, the difference in capital value will be treated as a capital loss and may be used to offset Capital gains on other shares sold in your portfolio or carried forward as a Capital loss.
The transfer value of the shares will be 100% deductible if you nominate a charity with DGR status. You get a tax deduction for the donation of the value of the shares and you can use the tax losses to offset your Capital gains. Importantly you donation will help the work of your chosen charity.