Anonymous
Anonymous

Can you claim nominal value shares bought at a premium as capital losses?

As a startup, the company has issued shares at a nominal or par value ($0.01 per share) to early stage investors who bought them at a premium (say $100.00). I guess this is pretty common in startups. In this case, the difference (i.e. $99.99) aka Capital in Excess of Par is shown as equity in the company's balance sheet as "Additional Paid In Capital".

My question is can the investor claim the total amount invested ($100 per share) as capital loss in his/her personal tax return, in the unlikely event the company winds up, and the total invested capital amount is irrecoverable? We're looking for a tax accountant who understands such intricacies for startups.

Top voted answer
Amanda Hoffmann - Certified Bookkeeper, BAS Agent

Amanda Hoffmann - Certified Bookkeeper, BAS Agent, Owner / Manager ★ Certified Bookkeeper ★ BAS Agent at My Office Books - Virtual Bookkeeper & BAS Agent

Top 10% Accounting

Business shares and equities require expert advice with all the variables given in full detail to make a professional judgement on their tax consequences. As professionals, tax practitioners have a duty of care to get the entire picture before volunteering advise. This is where you need to "pay" to gain the right guidance. 

There are excellent resources on the Australian Taxation Office website to help you gain some insight. You can then call the Australian Taxation Office and speak with them directly to obtain some help.

Here is one link that may assist
https://www.ato.gov.au/General/Capital-gains-tax/Shares,-units-and-similar-investments/Capital-losses-on-shares-and-units/

You can also use the ATO's AI called "Alex" to guide you to other online resources on the website. 

Hatty Bell

Hatty Bell, Community Manager at

Great insight @Amanda Hoffmann - Certified Bookkeeper, BAS Agent . So it's best to hire a tax accountant to process this rather than trying to do it yourself?

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Amanda Hoffmann - Certified Bookkeeper, BAS Agent

Amanda Hoffmann - Certified Bookkeeper, BAS Agent, Owner / Manager ★ Certified Bookkeeper ★ BAS Agent at My Office Books - Virtual Bookkeeper & BAS Agent

Top 10% Accounting

Absolutely @Hatty Bell 

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