Q. I have a Share portfolio where some of the holdings have a minimal value. I would like to tidy up my portfolio and sell some of these low-value holdings. How can I sell the shares cost-effectively so I can use the Capital losses to offset other gains in my portfolio?
A. The most common method to sell shares is via 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 fee will start from around $100 which can be expensive depending on how small the parcels of shares are or how little they are worth.
If you don’t require advice and you are only looking to have the sale of shares executed, an online broking or share sale service may suit you. The cost of selling shares online starts from around $9.50 per trade. A share sale service which does not require you to register an online trading account, may cost from $40 per trade. Online comparison sites will provide a guide to features and costs of the various online broking and share sale services available.
The minimum price a share can trade for on the Australian Stock Exchange (ASX) is 0.1 of a cent. If the holdings are small enough or the shares are worth that little, you may find that the cost of selling the shares may still be more than the value of the shares you wish to sell.
An alternative to selling the shares is to donate the small value parcels to charity. Sharegift Australia is a not for profit organisation that provides 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 you nominate provided the charity has Deductible Gift Recipient (DGR) status. Donations of $2 or more are tax-deductible to the shareholder.
To qualify for this service, the shares must be for an ASX listed company, not be owned by a Self Managed Super Fund and the value of each shareholding being transferred must be greater than $2. To be donated, eligible shares will need to be either Issuer sponsored or sponsored by a Sharegift Supporting Broker. For further information, Sharegift can be contacted at 1300 731 632 or visit www.sharegiftaustralia.org.au
If you are unsure of the status of the organisation you wish to support, visit the Australian Charities and Non-For-Profits Commission www.acnc.gov.au to search their register. 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 market value of the shares is lower than the purchase cost of the shares, the difference will be treated as a capital loss and may be used to offset Capital gains on other shares sold in your portfolio or can be carried forward as a Capital loss. Presuming you nominate an eligible charity, you will receive a tax deduction for the donation of the value of the shares and you can use the tax losses to offset your Capital gains.
The deemed disposal date of the shares will be the date the shares are transferred from your ownership to Sharegift Australia. To qualify to claim a tax deduction for the 2018 financial year, share donations would need to be submitted to Sharegift Australia by 5 pm on 26 June 2018.
Notwithstanding the tax benefits associated with this service, perhaps, more importantly, your donation will help the work of your chosen charity or a range of charities that Sharegift Australia support or endorse.