i noticed you have asked a lot of questions about tax
1. any time you sell a share is a taxable event
2. therefore, if you hold ANZ shares for many years but do not sell them there is no tax to pay on your ANZ shares
3. when you earn a dividend, this is income and therefore is taxable
4. at the front of your tax return, there is a place for dividend income and the franking credit
5. if you buy & sell shares very often on a short term basis, you are a 'trader' or 'business' for tax purposes and your profit from share trading is taxed at ordinary rates & your losses from share trading can be used to offset/reduce your other income (such as from employment)
5a. also, if you are a trader, at the end of the year (30 June) you can choose to value your stock on hand ('closing stock') at its market value therefore if you are carrying a loss on unsold shares you can use this loss to reduce your income made on sold shares and therefore reduce your tax payable for the year
6. if you buy & hold shares long term, you are an 'investor' for tax purposes & taxed under the capital gains tax (CGT) rules. under CGT, your shares sold are taxable but your unsold shares cannot be used to reduce your taxable income. if you make a CGT loss, this cannot be used to offset/reduce your other income, such as from employment. if you sell your shares after holding them for more than 12 months, you get a 50% tax discount on the profit
7. if you trade very often short term but also hold other shares long term, you should set up a 2nd account so to separate your trading & investing shares
8. if you use a company or trust for shares, these are different entities for tax purposes than you as an individual
9. therefore, if you transfer shares between you & your company or trust, this transfer is a 'sale' & thus taxable
10. accountants like you to set up companies & trusts because they are complex and require you to pay the accountant more fees for more work
11. companies are used to protect you from liability (getting sued) as a result of actions of the company. however, a company cannot protect your assets since you can be sued for money which includes the shares you own in your own company
12. trusts are used to split income between family members & thus reduce tax rates. if you are a single person then a trust is not so useful
13. if you trade or invest in shares using a company or trust and this results in a loss, the loss cannot be transferred from the company or trust. in other words, you cannot use losses from a company or trust to offset/reduce the income you earn personally from other sources
14. doing you own tax for shares is not difficult if you are prepared to learn a little
15. if you make profit from shares for a year over $4,000, the ATO will tell you to pay PAYG instalments each quarter (until you lodge a tax return showing profit from shares less than $4,000).
16. this quarterly PAYG installment can be varied down for a quarter if you do not make the required income for that quarter. however, be warned! if you underestimate the variation, you can be penalized
17. your accountant must lodge your income tax return by 15 May each year. if you make a profit for a year but make a loss in the next year, you should lodge your loss year tax return as soon as possible after 30 June so the ATO exits you from PAYG
18. for example, for the 2015 year, you make a profit. your accountant lodges your tax return on 15/5/16 and the ATO tells you to pay PAYG installments on 15/6/16. you make a loss for the 2016 year. if you lodge your 2016 tax return before 31/7/16 the ATO will sent you letter saying you do not have to pay PAYG instalments.
