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Cool pools

14 July 2009 / Mike Thexton
Issue: 4214 / Categories: Comment & Analysis , Capital Gains
MIKE THEXTON takes a dive into the capital gains tax treatment of share transactions

KEY POINTS

  • The ‘moving average’ basis of share pooling.
  • Exceptions to the pooling rule.
  • Bed and breakfast or breakfast and bed.
  • The treatment of rights and bonus issues.
  • Scrips DRIPs and SIPs.
  • A relatively easy and welcome system.

The problem with shares – apart from the fact that their values can go down as well as down these days – is that they are all the same.

An old-fashioned lawyer would describe them as ‘ranking pari passu’ which loosely translated (I did Latin A-level trust me) means ‘like frozen peas’.

If you have bought lots of frozen peas at different times for different prices and you now sell some of them how do you work out your capital gain?

The answer is that...

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