Telstra Shares Cost Base for Capital Gains
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Are you a Telstra shareholder looking to sell the shares that you purchased as one of their public offers?

Telstra 1

If you purchased Telstra 1 Shares in 1997, your original instalment was $1.95 on 3/11/1997, and the second instalment of $1.35 was on 13/11/1998. The total purchase price was $3.30 bought on 3/11/1997.

Telstra 2

If you bought Telstra 2 Shares in the second offer in October 1999, the original instalment for public applicants was $4.50 on 15/10/1999, and the second and final instalment of $2.90 was on 2/11/2000. The total purchase price was $7.40 for the two instalments being bought on 15/10/1999.

Telstra 3

For Telstra 3 Shares, the Telstra T3 consisted of an initial payment of $2.00 per share, with shares allotted on 24th Nov 2006, followed by a final instalment payment of $1.60 per share by 29th May 2008. On 10th June 2008, shareholders are issued ordinary Telstra Shares (TLS).

In addition, eligible shareholders who have held their instalment receipts since the issue, are issued a bonus share for every 25 they hold. Due to bonus shares, the purchase price of each share is reduced to $3.46 per share. For example, if you have 1,000 shares plus the 40 bonus shares, your calculation would be $3,600 / 1040 shares = $3.46 per share.

Prepayments of the final instalment were available on the Telstra 3 shares, and if prepayments were made, then the final instalment was discounted to $1.30 per share, and the bonus share was still issued. So based on the 1,000 shares in the first example, the cost base will be $3.17 per share, $3,300 /1040 shares = $3.17 per share.

Broker Service

If you bought the shares via a stock broker service, keep in mind that the cost base of Telstra shares for capital gains purposes is the original purchase price of the shares, including any associated transaction costs such as brokerage fees or stamp duty. It is essential to keep accurate records of the cost base, as it is used to calculate capital gains or losses when you sell the shares.

Capital Gains Calculation Example

When shares are held for longer than 12 months, a 50% discount on the capital gain is applied for Australian tax residents. In this case, if 1,000 Telstra 1 shares were sold for today’s price (February 2023) of $4.18, the capital gain calculation would be as follows:

Proceeds from the sale: 1,000 x $4.18 = $4,180 Cost base: 1,000 x $3.30 = $3,300 Capital gain: $4,180 – $3,300 = $880 Discounted capital gain: $880 x 50% = $440

Therefore, the discounted capital gain for 1,000 Telstra 1 shares sold at today’s price of $4.18, held for longer than 12 months, would be $440. This discounted capital gain would be subject to tax at the investor’s marginal tax rate.

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