I think it’s worth adding that the Israel financial year ends in...

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Yite

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11/01/19

11:49

Post #: 37090863
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Originally posted by Yite ↑

I've been trying to get my head around this selling and I've come up with a hypothetical. I'm not an accountant. I'm no expert in Australia or Israel taxation laws and I'm a bit loose with figures. But here goes...

About five years ago, the good doctor was a seed investor in an Israel based company called Weebit. He owned 345,000 shares purchased at a price that I do not know. If he paid one new shekel per share (AUD$130,000 total) I think that would have been reasonable. He may well have paid 100 new shekels per share.

In 2016 Radar offered 700 or was it 750 million shares to Weebit to buy out the company. The good doctor recieved over 141 million shares in Radar for his holdings in the old Weebit. (Radar was then renamed Weebit Ltd). I'm not sure what the deemed price of his new shares was but let's say it was 5c, the same price as the public offering at the time. So the paper value of his new shareholding was maybe a bit over $7m.

In August last year his shares were released from escrow. That's when the shares were issued to him and it created a capital gains event. He now has to pay tax on $7m minus maybe $130,000 or $1.3m. Either way it is a lot of tax to pay.

Israel does offer tax incentives for investing in R&D companies but lets assume he has to pay the full 25% tax rate. That's over $1.5m tax!
So where are we now? By my calculations he has sold $1.5m worth of shares so he should have enough to cover his tax bill. One upside for the poor bugger is that every share he is selling now he is making a capital loss. Selling his 5c shares at 2.5c should amount to a significant loss.

So in summary, if the selling is only to meet tax obligations then this week should see the last of it...

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I think it’s worth adding that the Israel financial year ends in December. Individuals have until April 30 to file their tax returns. Extensions can be granted.

It will be some months yet before anyone affected has to actually pay this tax...

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I think it’s worth adding that the Israel financial year ends in...

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