Take those losses

Most clients who invest in shares will have some realised capital gains this year.

It's a great problem to have: a capital gain problem is much better than a capital loss problem.

Possible solutions include large deductible superannuation contributions and capital losses. It makes sense to review our share portfolio and to identify any shares you do not wish to keep that have unrealised capital losses and to dispose of them, ie sell them, well before 30 June 2007. The capital loss on disposal will be available to offset any capital gain in disposal. What if you do not want to sell them, but want to take advantage of the capital loss, ie realise it and offset it against your capital gain? Here an off market transfer may be the answer. You sell the shares today to a related party, and then you buy them back a few days, or even a few weeks, later. The off market transfer realises the capital loss and makes sure it is available to you in this financial year.

One client asked whether she could back date the off market transfer forms to a date when the share price bottomed, thus maximising the capital loss. The answer was that she could not and the fact that the back dating could not be detected by the ATO did not change or answer in any way.