For as long as I can remember I’ve had a trader’s mentality, which is, pocketing gains as soon as I was able. For years I flipped between different stocks, winning some, but eventually losing more, and on several occasions if I only just held I’d have retired well before now. Ah ‘the ones that got away’ I’d say. But really, it was me who let them get away.
Taking up a position in Weebit Nano was like entering a different realm. Quite quickly I realised that a trader’s mentality may very well prove lucrative, but information I’d researched showed that this could actually be the one unicorn that you hear about, but don’t think it will ever be you. Sure I even had help from others to overcome my urge to trade Weebit, and to hold strong instead. Holding strong over several years has proven difficult to me.
Then recently someone mentioned capital gains tax implications of exiting a position in Weebit, but then re-entering later, to which I’ve started to think more deeply about. I’ve often thought that when that big announcement came, if Weebit spiked to $10 I’d sell out and re-enter at a much lower price. But the CGT consequences of doing this could far outweigh the benefits of just holding strong. If I bought 50,000 shares in Weebit at $0.90 per share and sold at $10 per share, I would need to declare a capital gain of either:
1. $455,000 if I’d held these for less than 12 months, or
2. $227,500 if I’d held these for more than 12 months (50% CGT discount).
At 36% income tax, this amounts to payable amounts of $163,800 and $81,900 respectively depending on whether I could claim the 50% CGT discount or not. I would therefore have to have these funds available at tax time, rather than using these funds to re-purchase shares at a lower price.
So if I go with example 2 where Iam eligible for the 50% CGT discount, I’ve pocketed $500,000 but need to give$81,900 to the tax man when he comes a knockin’. Therefore I now only have$418,100 to re-purchase a position. I would then need to wait until the share price dropped to $8.36 to repurchase the 50,000 shares and offset the CGT.
Food for thought…
(20min delay)