Share Transactions Share Transactions Special rules due to the nature of the asset Each shareholding in a company purchased on a separate date is treated as the acquisition of a separate asset for CGT purposes The principle of first in/ first out (FIFO) applies to the disposal of shares of the same class If a part-disposal of an asset of shares occurs, the part-disposal formula is not required as the price of each share unit will be the same at any particular point in time

Share Transactions Bonus Issues A bonus issues occurs when a company allocates shares to existing shareholders and no consideration is paid by the shareholders for the bonus shares. Shares are issued in proportion to the existing shareholdings

Share Transactions Bonus Issues For FIFO rule, shares acquired through a bonus issue are deemed to have been acquired on the same date as the original holding in respect of which they are issued. The cost per share is diluted as a result. The reason for this is that the total number of shares has increased while the cost of the shares remains the same.

Share Transactions Rights Issues A rights issue occurs when a company offers its shareholders the opportunity to purchase additional shares at a discount on the market value of the shares. Offered in proportion to shareholdings Requires additional outlay from shareholders and raises funds for the company

Share Transactions Rights Issues For FIFO rule, the shares are deemed to be part of the original holding in respect of which they are allocated. The price paid for the rights issue is treated as enhancement expenditure in relation to the original asset.

Share Transactions Rights Issues Indexation will apply at the date of the enhancement expenditure (date of the rights issue)

Share Transactions Bed and breakfast transactions Loss relief is only available for realised capital losses – no relief available unless the asset which has fallen in value is actually sold. Without anti-avoidance legislation, individuals could realise losses by a succession of paper transactions.

Share Transactions Acquisition of shares within four weeks of disposal Legislations stipulates that where a disposal and reacquisition of the same class of shares takes place within four weeks, the loss arising on the disposal of the shares can only be set against a subsequent gain arising on the disposal of the shares that have been reacquired.

Share Transactions Disposal of shares within four weeks of acquisition Legislations stipulates that the FIFO rule does not apply where shares of the same class are bought and sold within a period of four weeks. Last in/ first out rules apply to the previous four weeks.