negative net asset position, page-80

Hi Selmax,

Sorry to say your accountant is wrong. The good news is there is no limit to the amount of buys and sells.

There are 2 ways to claim your shares on a tax return.

1. As a share trader
2. As a share investor.

1. A share trader (what I've set myself up in this market) can claim losses on shares against ordinary income. you have to set yourself up as a sole trader with an ABN and register for GST. The good news with this is I get back all the GST paid on my brokerage. I can claim all losses against my wages. If the losses are more than my wages and other income the losses carry forward to next year. With the shocker we have had, I didn't pay any tax last year as my losses were more than my income. Got myself back a $45000 refund, plus around $5000 in GST credits. Please note the 12 month rule for capital gains does not apply in this case.

2. As a share investor you can only claim losses against gains. If you have no gains for the year or if your losses are more than your gains the losses carry forward indefinately. The bad thing about this method is you do not get an immediate benefit for your losses as in situation number one. You can't claim back the GST as a refund either. You do get the benefit of the 12 month rule though.

The 12 month rule is not as good as it sounds.
The rule states that if you hold any shares for more than 12 months you only need to declare 50% of the gain. The hidden rule is you need to take into account the full gain when offsetting against losses.

For example 1. - You have $20000 in losses for the year and $25000 in gains from shares held more than 12 months.
What you declare on your tax return is ($25000 - $20000) / 2 =$2500 in gains, NOT ($12500 - $20000) = $7500 loss

Example 2. - You have $20000 in losses and $15000 in gains from shares held more than 12 months. You carry forward $5000 in losses to next year.

Hope this helps