Probably good to discuss this offline one day if we all meet for a drink & chat, but in closing out my comments (as things seem to have taken somewhat of a twist & turn from my original post), here are some points to note about all of the great comments with widely ranging opinions and even warnings.

1, Always seek your own tax advice and pay for the best advise you can afford. Personally, and for all of my entities I use a Tier 1 accounting firm, a tax lawyer (who is also a CPA and advises the AATO when new rules are being circulated) and independent Auditors for my SMSF that was formed in the early 90's when SMSF's were not the craze. All of this has cost me a lot of money over the years, but I have had a few desk top audits from the ATO in my businesses and have never had any notices or concerns from my SMSF auditor or the ATO for any of my entities (including a services business with 200+ staff that I ran for 18 years before working as a GM Sales and BD for a large global corporation in my last 10+ working years).

2, There are loosely 3 types of tax reduction methods (my view only) (a) Tax Evasion (illegal), (b) tax avoidance (illegal) and (c) tax minimization (legal and used by all taxpayers e.g. expenses incurred in earning an income, etc.). I am a great believer in (c) and use this legally to only pay the tax I should each year From a personal perspective, I am a huge fan of taxing the wealth, the more you earn, the more you pay and over my 440+ working year I have definitely paid my fair share, but to quote Kerry Packer's famous line “I am not evading tax in any way, shape or form. Now of course I am minimizing my tax and if anybody in this country doesn't minimize their tax, they want their heads read because as a government I can tell you you're not spending it that well that we should be donating extra".

3.The strategy I was suggesting that might be looked into (using your own advisory team) was undertaken in 2020 (as stated in the original post). I no longer am allowed to make any further non-concessional contributions to my SMSF on my behalf as I have reached my cap.

4.Not every share that was transferred off-market had a capital loss, in fact many had capital gains as well and this tax was duly added to the selling entities annual taxable income.

5.Virtually all of the transferred shares are still held by the SMSF.

6.I do not have an accountant that suggested I go backwards 30-90 days and pick the lowest price to suit my situation (as some have suggested, including what I should do with that accountant.....cheers). I have openly identified to fellow Strawman members about the article that prompted me from the Australian Newspaper (now attached) and the fact that the ASSX has a 90-day window. The dates on the supporting paperwork, the price of sale on that date and the purchase price on that date are all the same and the only thing of any importance to the ATO. This is not an end of FY tax strategy per se but a longer-term strategy for shifting assets that are worth keeping for a long term into lower tax areas.

7.I did finish my original post with a "tread your own path" warning, as you should with anything in finance and I reiterate that here. I haven't gone into great specifics for that very reason and everyone's tax situation is almost invariably different. I used a strategy that worked for me and my entities, if someone gets a little benefit out of that and with your own advise can make it work for you, then that's great too, but please do not attempt tax avoidance or tax evasion and yes, I do understand the Anti avoidance rules.

Lastly, thanks for all of the feedback, comments, suggestions and votes. I'm a little overwhelmed with this being my first forum post but do appreciate the attention and feedback good and bad!!!

@lowway thanks for triggering a robust discussion and your thoughtful summary. You’ve certainly given me food for thought.

Next mission for me is to convince my wife that extra contributions to Super are a good thing. She’s (probably rightly) suspicious that the government won’t be able to resist changing the rules over time and further taxing the large honey-pot that the nation’s super balance represents. (Not that I’m likely to get there but the crazy tax rules around the 3m threshold are a good example). I think my best argument here is that even if they make it worse than today, its probably still going to be better than money outside super.

I know for the first 20 or so years of my working career I didn’t take super seriously which I now regret. I think perspective changes as the balance increases and you get closer to being able to access it.

@lowway yes thanks for starting the forum. I think it’s very important to get your head around all this stuff early in your working life as it can make a huge difference to your retirement funds. Like you, we have also reached our super caps and no longer making contributions. After starting our SMSF we made full use of the concessional super contributions and made non-concessional contributions when we could. It’s the best thing you can do to save income tax and boost your retirement funds in a low tax environment. I think the Australian super system is incredible if it lasts. As retirees we have started the pension phase and all earnings in the super account are now tax free, which means each year we receive a huge franking credit refund (touch wood, this has been threatened a few times). My advice would be to contribute as much as you can to super while you’re earning and to explore all the avenues open to you to get it in there, including @lowway’s suggestions. Best to seek good advice on what’s allowed and take full advantage of it!

@lowway not sure I quite follow the 90 day strategy but I'll do some more digging to better understand that. Looks like you are effectively nominating any point in the last 90 days as the point of transfer for assessing the $ value. So effectively I could also delay by "tax loss selling" by up to 90 days for stocks I wanted to transfer. Although managing this strategy across EOFY might be a bit complicated due to things such as super non-concessional caps.

I'm thinking of doing some in specie transfers this FY now that I have a non-concessional contribution cap back. I'd mainly been thinking about transferring the higher dividend yielding stocks into the SMSF (to take advantage of the much lower tax rate on earnings) and also those that have an ability to trade options (selling covered calls to extract a bit more yield better in the lower tax environment of super). But your strategy of crystallising the losses outside super (and then hopefully taking the future gains inside super) has caught my interest. I'll have to review the list of stocks that I was thinking of transferring.

I've mostly been looking that the addressable candidates as being those in my name or my wife's name (the challenge with most of them is that they are in strong capital gain positions having been held for a long time) but I'm also wondering if there is some way I could also do this from the family trust which has a few of the newer and more speculative Strawman style small cap stocks which are nursing short term losses (i.e. effectively an in-specie transfer as a trust distribution rather than a cash distribution and then a further transfer on to the SMSF as a non-concessional contribution) ... probably one for the accountant.

@RhinoInvestor you're correct about the 90-day window the way you explained it. E.g. I picked 26 March 2020 as the day of transfer and the closing market price on that day for various shares and did the paperwork and submitted to ASX via Selfwealth in early June 2020.

I initially thought the SMSF independent auditor may have an issue, but once I submitted all of the paperwork showing approvals from ASX, there was no problems raised.

Re: transferring from a Trust to the SMSF, I'd suggest it would be the same as I did when transferring from my Pty Ltd to the SMSF. The in-specie transfer paperwork was showing a direct transfer when sent to the ASX, but for accounting purposes it was Company to me as a loan to SMSF.as a non-concessional contribution.

Hope that helps.

That's fascinating @lowway, thanks for sharing.

Any accountant or tax experts here that have a view? Seems like a great way to minimise tax.

Interesting @lowway - is that 90 day allowance documented anywhere on the internet please? I wanted to do a first-time NCC in specie transfer recently, and my SMSF accountant told me I had to choose a transfer date in the last 30 days.

@RogueTrader Funnily enough I've had similar comments from accountants, but no one has ever been able to show me that rule in black & white.

I stick with 90 days as the maximum in arrears days, not because there is any ATO rule, but because that is the rule from the ASX for CHESS clearance, etc. I can't upload a copy of the Selfwealth off-market transfer form here, but this is a cut and paste from one of their completion rules:

10. DATE OF TRANSFER Insert the date of purchase or completion of the off-market transfer. This can be an estimate, but must not preceed three months prior to form submission.

From memory, Commsec had a similar qualification on their form as they all use a ASX standard. As far as the ATO is concerned, as long as the transaction date and market price align on that day, then that is the day for calculating CGT for the seller and for purchase by the buyer. The only ones that set time limit are the ASX.

As stated in the original post, I've had no issues when undertaking these off-market transfers with either my accountant or the auditor, as they simply accepted the ASX transfer and documentation showing the pricing on that day.

@Strawman this is the other option to holding growth stocks forever as per the podcast discussion 2 June 2024. You actually can hold them forever, but eventually in a entity that may have a zero CGT environment, although that may mean no changes before you reach 60 and formally retire ????????

I used this exact strategy in the past @lowway @RhinoInvestor @Strawman… at least until our Superfund Auditor warned us that what we were doing was known as “Washed Sales” and is a form of tax avoidance frowned upon by the ATO.

I did this over two consecutive years because I didn’t know it wasn’t allowed until I got the warning which was after I had repeated it in the second year. So we were warned a second time.

Thankfully it only went as far as the auditor and the ATO took no further action. If the ATO take action they will disqualify the capital loss in your private account, plus you’ll cop a fine.

You might get away with this for a year or two, but be careful…It’s not allowed! There is some info here on the ATO about “Washed Sales” - https://www.ato.gov.au/media-centre/wash-sales-the-ato-is-cleaning-up-dirty-laundry

@Rick @RhinoInvestor @Strawman Thanks for the warning, but I don't need to use this strategy again Rick. I also think your accountant gave you some poor advice, as this is not what is defined as a washed sale, otherwise there would be no provisions for in-specie transfers in the ATO rules. What is commonly known and accepted as a wahed sale is selling prior to the end of a FY then repurchasing the same shares early in the new year to crystalise capital losses, etc.

Anyway, to quote someone else in the industry, tread your own path.

Sorry, I should have also said, if you're sole purpose is to avoid paying tax or CGT, then that would broadly be wrong under the ATO's catch-all definition. However there is no penalty for minimialisig your tax via in-spcie transfers to an entity with a lower tax threshold. BTW not every share I transferred had a capital loss!! ????

In-species transfers into super are fine @lowwayand a great way of making a super contribution if you don’t have the cash available.

Great info @lowway. I think I follow you. Exactly how does this differ from someone who hasn't got an SMSF and just sells their shares held in their own name and buys the same quantity back again in their regular super fund that has a inbuilt trading platform (assuming they are in the ASX 300)? Is it just the 90 days of "hindsight" to pick the sale date that you get when you have an SMSF? Thanks

Not really @actionman, the 90 days is not related to an SMSF specifically, it's the maximum time in arrears that the ASX stipulates on their proforma form for any off-market trade. E.g. it could also apply between you and a company you are a director of or vice versa. Usually your CHESS sponsors states between related parties and they must be the sponsor for both parties.

The ATO rules on wash sales are more than just selling something and re-purchasing it in the new year.

They dealt with this a couple of years ago in a legally binding ruling which can be found here.

https://www.ato.gov.au/law/view/pdf/pbr/tr2008-001.pdf

What you're describing would fits into this description...

The term wash sale does not have any precise meaning. In commerce the term wash sale is used to describe the sale and purchase of the same, or substantially the same, asset within a short period of time of each other. The sale and purchase cancel each other out with the result that there is effectively no change in the economic exposure of the owner to the asset. More generally, the expression wash sale is used to describe arrangements where a disposition of an asset occurs without an intention of ceasing to hold an economic exposure to the asset

This Ruling is, therefore, concerned with arrangements under which a taxpayer disposes of, or otherwise deals with, a capital gains tax (CGT) asset (the asset) where in substance there is no significant change in the taxpayer’s economic exposure to, or interest in, the asset, or where that exposure or interest may be reinstated by the taxpayer (a wash sale), in order to apply a resulting capital loss or allowable deduction against a capital gain or assessable income already derived or expected to be derived.

Examples of wash sales where Part IVA might be in question for the purposes of this Ruling include the following. In each of the examples below the taxpayer disposes of or deals with the asset so that a CGT event happens and a capital loss or an allowable deduction is incurred (whichever is relevant). For instance, by selling the asset (CGT event A1)2 , by creating a trust over the asset by settlement or declaration (CGT event E1)3 , or by transferring a CGT asset to a trust (CGT event E2).4

...

(f) the taxpayer disposes of or deals with the asset to a company which the taxpayer is a member of, or to a trustee of a trust the taxpayer is a beneficiary or an object of, and the taxpayer controls or influences the company or trustee, or is the trustee or appointor;

The ATO generally is more interested in why you are doing something rather than what you are doing and Australia has a general anti-avoidance provision (Part IVA) which scoops up almost anything that is being done where the primary purpose is tax minimisation. If my accountant told me I could pick whatever day I wanted within a 3 month period to maximise the CGT loss on my wash sale I'd probably be looking for different accountant.

Echoing UlladullaDave's thoughts here. Please be very careful implementing this strategy.

Whilst I'm sure it has worked for plenty of people, this is right in the grey zone of tax legality in my view and if the ATO were looking at your tax affairs for any reason, they would be well within their rights to ask you to prove that your share sale / transfer was in the best interests of the SMSF beneficiaries.

The below link includes details of a case whereby a capital loss in a trust was disallowed due to the sale to his SMSF being made to offset other large gains.

https://www.smsfadviser.com/news/21253-part-iva-risks-flagged-with-tax-planning-and-capital-losses

This could also end up being a situation where a good accountant wins your dispute with the ATO, but not before he charges you $5-$10k in fees for his efforts.

Lastly, I note that the Part IVA tax laws have no time limit, so doing this repeatedly with larger stakes over time could eventually see all previous capital losses be disallowed at once at some point in the future.

Please consider getting precise tax advice before attempting this strategy and if you still wish to go ahead, I would document your decision to transfer being based on the appeal of contributing your shares into a lower tax-rate environment very clearly.

My situation is a bit different. My wife has sold shares that she held in her own name, and sometimes I have bought a similar number of the same shares in my Australian Super trading account at the same time because we still believe in the business. The benefit to me/us is those shares are now in a lower tax environment (i.e. super), and I can get a tax deduction for a personal concessional contribution because I'm in a high personal tax bracket. Most of these shares have incurred a capital gain, but some small number have incurred a capital loss. But, in aggregate, we are paying a relatively small amount of tax now with the benefit of moving her investments into my super so we have tax free income when we retire.

It's a great strategy but perhaps in future I need to be careful buying anything in super that my wife has recently sold from her personal account and claimed a CGT loss. A really grey area that I wonder about is; say my wife sold an ETF at a loss, does that mean there may be hundreds of shares that I can't buy for 45 days! Lets hope the ATO isn't going too far with this rule :-).