Question 1: If I sell a share to crystallize a loss, is there any rule from the Tax Office about how long before I can buy them back again? Like many others, I am sitting on some losses on shares that I want to keep – but I have also realized some capital gains during the year. I would like to use my losses as offsets to the capital gains.
Answer: I am not aware of any specific ATO rule or guidance. However, you need to be aware of the “catch all” anti-avoidance rules covered in Part IVA of the Income Tax Act. The expectation is that you will take “economic risk” on the transactions. Bottom line – I would ensure there were some days between the “sell” and the “buy” transactions (so you are definitely taking “economic risk”), it is done on an ad-hoc basis rather than a systematic basis, and you don’t go overboard with it. I would encourage you to consult with your accountant or tax adviser.
Question 2: I have been holding Appen (APX) since October 2021. I don’t understand why they go up and mainly down all the time. Are you able to explain it to me?
Answer: Appen has repeatedly fallen short of its own guidance on revenue and earnings. That’s why the stock has fallen so much. There is also a concern that some of its major customers, such as Facebook, are cutting back on their expenditure on AI-related projects/initiatives. It has lost credibility with the market. This is seen with the major broker analysts. Firstly, only 3 major brokers now cover it. Next, they either have “neutral” or “sell” recommendations. Finally, the consensus target price is down to $6.43 – still a 22.5% premium to the last ASX price of $5.25, but nowhere as big as it has been in the past.
Appen is holding a virtual Investor Technology Day on Thursday 23 June from 10.30 am.
Question 3: Why has Grange Resources (GRR) had such a good run?
Answer: One of Australia’s lesser-known iron ore producers, Grange Resources has almost trebled in price over the last 12 months. Grange is a producer of magnetite pellets, a higher quality product than iron ore fines. It mines the raw material in Tasmania, before crushing and transforming it into pellets, which are then exported to BlueScope in Wollongong and to Asia.
Strengthening iron ore prices has allowed Grange to increase profit by 57% and spin-off considerable cash. Two fully franked dividends of 10c per share, one paid in December 21 and the other in March 22, put Grange on a prospective yield of about 13.9% – with franking on top!
Question 4: Who gets the spouse tax offset – the person making the super contribution or the spouse?
Answer: If you make the super contribution to your spouse’s super fund, you will get the spouse tax offset. Just like a tax rebate, it is potentially worth $540. Your spouse must meet three eligibility tests.
Firstly, they must be under 75, and if between 67 and 74, have met the work test for 21/22. Under 67, no work test. Secondly, their total income in 21/22 must be under $37,000 (this includes their assessable income, fringe benefits and reportable employer super contributions). Thirdly, their total super balance as at 01/07/21 must be less than $1.7 million. To get the maximum tax offset of $540, you need to contribute $3,000 to your spouse’s super.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.