X, aged 42 and a qualified lawyer is in the process of completing his income tax return for the income year ending 30 June 2020. He seeks your assistance/advice on how to deal with the following transactions in his tax return: On 15 October 2019, X sold all his shares in X1 Ltd, a company listed on the Australian Stock Exchange. He bought the shares on 7 July 2010 for $50,000 and sold them for $150,000. X purchased the shares with the purpose of making a profit from their sale. (X did receive dividends during the time he owned the shares). X advised his stockbroker to place the sale proceeds in a cash management trust that had its headquarters in Hong Kong. This trust was paying 15% interest per annum on short-term deposits and many Australian investors were using the trust. X's thinking was to hold the money temporarily in the cash management trust while he decides what to do with the funds in the long term. Unfortunately, on 30 December 2019, X’s stockbroker (Y) advises X that the proprietors of the cash management trust were professional fraudsters and that they had defrauded numerous investors of millions of dollars. In short, X’s $150,000 has also been stolen and there is no chance of getting any of the money back. Between 2009 and 2020, X only bought and sold other shares around five times. As at 30 December 2019, X was still thinking about the long-term use of the $150,000. X received an interest payment from the fund of $5,500 on 15 November 2019. X has a net capital loss of $20,000 from the 2015-16 income year.

Answer rating: 100% (QA)

Fact Given In Question 1 Sale Purchase of share share is held more than a y... View the full answer