You might have shares sitting in your existing trading account, or perhaps you have received shares as a gift, inheritance, or part of an employee share scheme. Whatever the circumstance it pays to know the basics of how to sell shares, as well as what happens once they have been sold.
Using a stockbroker to sell shares
A stockbroker is a person or company authorised to buy and sell shares, kind of like a middleman between you and the marketplace you’re selling on. There are generally two types of stockbrokers: online and full-service.
Online stockbrokers are generally cheaper as they are classified as ‘execution only’, which means you can trade shares, but tailored advice is not offered. Although, online trading platforms like ANZ Share Investing have tools and resources available so you can research what to sell.
Full-service brokers provide advice and can buy and sell shares on your behalf, but they typically have higher fees.
Once you’ve determined which shares you want to sell, as well as how many you’re selling, you’ll need to let your broker know or place a sell order using your online trading platform.
Selling shares on the ASX
Selling your shares on the ASX is a pretty simple process. If you’ve already purchased shares in the past, the steps for selling them are quite similar.
When you sell shares, take note of the ASX’s normal trading hours of 10am to 4pm AEST. From 4:00pm to 4.10pm there is no trading, however orders can be entered, amended and cancelled while the market prepares to close. What occurs next is known as the Closing Single Price Auction (CSPA) which is when all overlapping buy and sell orders will trade at the final closing price. This occurs sometime between 4:10pm and 4.11pm.
You can place, amend or cancel orders outside of these times, but no actual trades will take place until the ASX reopens.
Choosing an order type
When you sell your shares you need to choose the type of order. There are three types of orders you can place:
- Placing an at market order means you will sell your shares immediately at the best available price.
- Using a limit order you specify a price for your order as well as a time period for which it will remain active. Limit orders will only trade (be executed) when the market reaches the specified price. The entire order will only trade completely if there are enough buy orders placed at the price you want to sell for.
- A conditional order is either a limit or an at market order which will only be placed in the market if the market reaches your predetermined price.
There are two dates to be particularly aware of when selling shares: the trade date and the settlement date. The trade date is the date you sell your shares in the market. The settlement date is when payment is made for the sale of shares and ownership is transferred. Settlement occurs two business days after the trade date and is often referred to as T+2 (trade date plus two business days).
How do I receive the payments from my sold shares?
When you first set up your share trading account, you will also need a linked bank account. At ANZ Share Investing, a Cash Investment Account is automatically opened and linked to the share trading account. This is where the proceeds from your sale will go once settlement is complete. The money will usually appear in your account two business days after you sell your shares (T+2).
Will the payments be taxed?
If you sell your shares for more than what you bought them for, you’re generally making a capital gain. If you sell them for less, you’re generally making a capital loss. It’s important to understand that you might have to pay tax on any capital gains made.
The amount of tax you pay is influenced by a few factors:
- Your marginal tax rate for that financial year. This is because your capital gain is added to your assessable income.
- How long you have owned the shares. If you’ve held the shares for more than 12 months, you can usually discount the capital gain by 50 per cent, meaning only half the gain is included in your assessable income.
- Whether you made any capital losses in the current financial year or earlier. Capital losses can reduce capital gains in the same financial year or they can be carried forward to reduce future capital gains.
It is a good idea to seek advice from an accountant or tax practitioner to become familiar with how your share investments impact your tax situation.
I didn’t purchase the shares myself – am I taxed when I sell my shares?
If the shares were given to you as a gift, the capital gain or loss is calculated on the day of disposal based on the market value on the day you received them.
If you received the shares through a demerger, information on the tax implications should have been provided to you around the time you received the shares.
If you inherited the shares, your capital gain or loss is calculated differently depending on whether the shares were originally bought before or after capital gains tax was introduced on September 20, 1985.
If you received the shares as part of an employee share scheme, the tax rules can be complex. Two employees working for the same company and with the same scheme offering can be taxed differently. For inherited or employee shares in particular you might want to seek professional tax advice if you are thinking of selling.
Get started with share investing
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