Gains on Shares

Capital Gains on disposal of Shares need to apply special rules when compared to standard capital gains calculations. This is because, individuals may buy and sell number of shares from same company at different prices and at different periods in time. When shares are mixed in such way, it may be difficult to identify which shares are actually being sold and hence identify their purchase price.

Share Matching Rule

Share Matching Rule needs to be applied to sale of shares. This rule applies to individuals only and does not apply to companies.

There are 3 matching rules:

  • 1. If an individual disposes of shares, he is first deemed to have sold any shares he acquired on the same day
  • 2. Next, the shareholder is deemed to have sold any shares he acquired in the following 30 days.
  • 3. Finally the disposals will be matched with all other share acquisitions which are “pooled” together and form one asset for CGT purposes.
    These assets are called section 104 pool.

Further Complications

Additional complications can occur where there is a Bonus Issue, Rights Issues, Free Issues or Take Over shares.

All of these require different treatment when it comes to calculating gains on shares.

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