Q. I have several shares with losses. What are the rules if I was to sell them before financial year to get a capital loss, but buy them back at some stage? Is it any different if I was to firstly buy some more and then sell half of them for example? What constitutes a share wash?
A. Thanks for the question.
If you are in any doubt, you should access the assistance of a qualified accountant or tax professional.
There aren’t any specific rules per se, except that any transaction or series of transactions that could involve a “scheme” could potentially run fowl of the general anti-avoidance provisions in Part IVA. The ATO has provided its guidance in Taxation Ruling TR 2008/01, which deals with “wash sales” and is available here.
Generally, it can’t be a scheme for the avoidance of tax, there must be separate sale and purchase transactions, and there must be a sufficient time interval such that there is a material financial risk. In an example the ATO considers in the guidance note, it doesn’t think that 24 hours is sufficient.
I hope this helps.
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