Q. Within my portfolio of shares I have some stocks that are now virtually worthless and I see no sign of their outlook improving. I would like to sell some of these low-value holdings. Given that these shares are worth so little, the broking fees as a percentage of the share values is ridiculous. Can I sell the shares cost effectively so I can use the Capital losses to offset other gains in the 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 minimum 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 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.
The minimum price a share can trade for on the Australian Stock Exchange (ASX) is .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 either under a full-service broker or via an online broker 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 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
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 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. 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 2017 financial year, share donations would need to be submitted to Sharegift Australia by 5 pm on 28 June 2017.
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.