Ann: Elixir adds new Taroom Acreage, page-89

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This describes the quick sale and re-purchase of securities to minimise tax, also known as tax loss harvesting. "The sort of transactions that the ATO is watching closely are those that generate a tax benefit where a benefit would not have ordinarily been available if the transaction wasn’t entered into in the first place," says Brett Evans, managing director, Atlas Wealth Management.

If you are an investor who was unlucky enough to invest in an underperforming stock, selling your position and turning it into a taxable loss would not be classified as a wash sale.

However, if you were to sell those shares, and then repurchase the same, or similar amount back in a short period of time, this may be classified as a wash sale. The argument may be made is that the reason for the sale of the underperforming stock was not because you wanted to reduce your position in Telstra, but to crystallise a capital loss. Reentering the position is strong evidence of this.

According to Bruce Brammall of Bruce Brammall Financial, the ATO can’t stop you from selling or buying assets, but if you are selling shares to crystallise a loss, he urges investors to be careful.

"The ATO wants to make sure that taxpayers aren’t just selling shares just to get a tax break. So, if you sell shares to crystalise a loss, with the aim of using that capital loss to offset a capital gain on other shares, then buy back the same amount of shares on the same day, or within the same week, they might view that as a wash sale," he says.".....

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