Lincoln Indicators chief executive Elio D’Amato said the period leading to 30 June presents an "excellent opportunity" for investors to maximise returns in the second half of 2014.
“The market has had a strong 12 months and hopefully you’re sitting on some gains. However, there will be a few investors out there who have neglected underperforming stocks and this could be dragging their portfolio down,” said Mr D’Amato.
“We recommend reviewing your portfolio and speaking to your tax adviser – if a stock is no longer behaving as you wish and it doesn’t look like it will improve, there is the benefit of selling it now to maximise your after tax return.”
Speaking to InvestorDaily, Lincoln Indicators research manager Dennis Ng said that if you’re currently holding shares with losses, you may want to realise some of those capital losses in order to avoid paying tax on some of the capital gains you want to realise.
“That becomes a balancing act in itself,” said Mr Ng.
He said investors should also consider “which holdings you’ve had for more than a year because you get a 50 per cent capital gains tax discount for the capital gain”.
He said those capital gains “might not be necessary to offset with capital losses”.
“Finally, in regard to franking credits and the 90-day rule, you want to make sure you don’t put yourself in a place where you’re not entitled to those franking credits, because you know at the end of the day it’s real money in your pocket,” said Mr Ng.
He also said investors may want to consider the Budget changes, particularly the fact “franking credits are likely to be reduced if the change to corporate tax and the deficit levy come into place”.
