Your sister would be able to run these rough numbers based on the scenario put forward by
@ohyeah76 then:
Scenario 1: buy 5m KRC/KRR shares @ $0.004 for $20k. Sell all 5m shares at $0.18 in 6 months and collect $900k gross proceeds. Gross capital gain of $880k and pay income tax of $418,000 (top rate 46.5% + 1.5% medicare levy), leaving net profit after tax of $462k (plus orginal $20k invested). The sp retraces to $0.03 and you buy back in another 5m shares for $150k. Sometime between 1 - 2 years the sp gets back up to $0.20 and you sell out again for $1m gross proceeds. Gross capital gain of $850k less 50% CGT discount leaves $425k taxable gain on which you pay $201,875 tax and leaving you with after tax profit of $648,125 (plus original $150k invested). So in total from the first $20k, you've now got $1,280,125 in after tax funds and you've paid tax of $626,125.
Scenario 2: buy 5m KRC/KRR shares @ $0.004 for $20k. SP shoots up to $0.18 in 6 months but you don't sell then because you won't get the 50% CGT discount (after all that extra tax is better in your pocket not the ATO). The sp then falls back to $0.03 and you think, well I'm still up on the original investment so I'll wait til it gets back to $0.2 and sell then. It does make it back to $0.20 in 1-2 years time and you sell for $1m gross proceeds for a gross capital gain of $980k. You deduct the 50% discount to leave a taxable gain of $490k and you pay $232,750 leaving you with $747,250 (plus your original $20k invested). Like a boss, you've save a whopping $393,375 of income tax than if you had followed scenario 1! awesome. But then you realise that you only made a profit once and are actually down $512,875 over the same period of time in the same share as in scenario 1 and you also haven't had the benefit of the spare $310k to invest in other things over that time that you would have had in scenario 1.
The point is, being too caught up with how much tax you'll pay can actually be detrimental to your decision making and hold you back from making larger profits overall.
(20min delay)