# Capital Gains Tax (CGT) on the sale, gift or exchange of an asset

## Selling or disposing of shares

Calculating CGT is straightforward if your shares are all the same class and were acquired at the same time.

There are special rules for calculating CGT when you have acquired shares:

• on different dates
• through a bonus or rights issue
• of a different class.

### Shares acquired on different dates

You might hold shares of the same class which you acquired on different dates. When you dispose of some of the shares, the oldest shares are treated as being sold first. This is know was the First-in First-out (FIFO) rule.

Using the FIFO rule, the allowable cost is calculated by using the cost of the shares you bought first.

### Shares sold within four weeks of acquisition

Shares bought and sold within a four-week period cannot be offset against other gains.

You can only deduct the loss from a gain made on a subsequent disposal of same-class shares acquired within the four weeks.

## Bonus or rights issues

You might receive additional shares from a bonus or rights issue. These shares are treated as being acquired at the same time as you acquired the original shares.

### Bonus issue

A bonus issue is where a company issues additional shares to a shareholder for no cost.

If you are not selling all the shares you hold, you will need to calculate the cost per share. This is calculated by dividing the original cost by the new number of shares.

If you are selling all shares, the original cost is considered the cost for all the shares.

### Rights issue

A rights issue is where a company issues shares to a shareholder for a cost which is less than their market value.

When you dispose of these shares the cost of the rights issue is an enhancement expenditure.

If you are not selling all the shares, you will need to calculate:

• the cost of the shares sold. To do this:
• divide the original cost by the new number of shares
• multiply this by the total number of shares sold.
• and
• the enhancement expenditure of the shares sold. To do this:
• divide the rights shares cost by the new number of shares
• multiply this by the total number of shares sold.

### Shares of a different class

You might receive shares, under a bonus or rights issue, that are a different class to the shares that you hold. Because the shares are different classes, you cannot identify the allowable cost of the shares disposed.

You will need to calculate the cost (or enhancement expenditure) of each class of share. To do this:

• multiply the original cost by the market value of the class of share
• divide this by the total market value of both classes of shares.

#### Market value

The market value of:

• quoted shares is the quoted price on a stock exchange the day after the bonus or rights issue
• shares not quoted on a stock exchange is the value of the shares at the date of disposal.