Caketin - I phoned him to ask - He answer is - " I am not comfortable investing more into the market now , but I want to take up my rights @53c as its cheaper than I can sell some now. Had this been July I would have put more money in. I understand that I am liable for CGT between the cost which is probably around 40c and the 62c I sold at but at least its increasing my base cost"
I did the numbers - sell 6000 @ 62c = $1320 profit say 20% CGT as held for more than a year. Tax $264. Buy 6000 @53c = $3180 + Tax $ 264 = $3444 Sale proceeds = $3700
So whilst I dont think he thought through it he is in fact a few hundred dollars better off and the tax base price is set @53c on the 6000 he takes up.
What I gathered is that in July he would have found some money and increased his holding - In this market he is only happy to have the same exposure.
PGC Price at posting:
63.0¢ Sentiment: None Disclosure: Held
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