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Here’s why the ATO is looking at your share portfolio

In order to better investigate the tax implications of direct share holdings, the ATO is extending its share data matching program.

Using share data from ASIC along with information from brokers, registries and exchanges, the ATO said it will use "sophisticated technology to match the data against information reported in tax returns and other ATO records."

The lay of the land

ATO assistant commissioner Kath Anderson said this was important due to the increasing number of Australians owning shares - more than five million Australian adults, according to recent estimates.

"Almost one third of all Australian adults own shares," she explained, "and there is evidence that some taxpayers are getting it wrong when it comes to reporting their capital gains or losses from the sale of shares."

"In particular," she continued, "we tend to see higher rates of error among those who don’t regularly trade in shares and who are not aware of the tax implications."

Anderson added that the ATO intends to "pre-fill as much information as we can" so as to assist taxpayers and agents in "[getting] returns right."

What should I look out for?

The ATO said there were three simple rules shareholders can follow in order to avoid erroneous entries on their tax return.

First, it's important to keep records of share purchase and sale prices along with brokerage fees. "If you sold part of your share holdings," the ATO said, "you will need to keep records of the parcel you sold and the parcel you are still holding. This information is critical in calculating your capital losses or gains."

Second, always declare any capital gains in your tax return. And finally, the ATO explained, "if you have made a capital loss this year, remember you cannot claim it as a deduction in your return.

"However, you can offset the loss against any capital gains you make this year, and if there is any loss remaining you can carry it forward to reduce any future capital gains you make."

Given the increased focus the ATO is placing on share ownership, its important to ensure your data matches theirs.

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