The Maximize Gain Tax Strategy

The Maximize Gain strategy is a method of calculating capital gains. It is used when investors are trying to maximize their capital gain.

The strategy is simple. When calculating the capital gain, you process trades in order of the price you bought them for, with the lowest price parcel coming first.

An example of Maximize Gain:

Purchases:

• Buy 10 shares at $1 each — Total cost: $10
• Buy 10 shares at $5 each — Total cost: $50

Sale:

• Sell 10 shares at $4 each — Total sale value: $40

Maximize Gain Calculation:

• Lowest price parcel: 10 shares at $1 each — Total cost: $10
• Sold 10 shares for $40

Capital Gain:

• Gain: $40 (sale value) — $10 (cost) = $30

A more complex Maximize Gain example.

Suppose we buy the following parcels:

• Buy 10 shares at $2 each — Total: $20
• Buy 5 shares at $5 each — Total: $25
• Buy 10 shares at $3 each — Total: $30

This gives us a total of 25 shares at different price points.

Now, let’s sell 13 shares at $4 per share using the Maximize Gain method.

First Parcel (a):

• 10 shares at $2 each.
• Total cost: $20
• Sale value: 10 shares x $4 = $40
• Gain: $40 — $20 = $20

Second Parcel (b):

• Remaining 3 shares to be sold.
• Next parcel: 10 shares at $3 each.
• Cost for 3 shares: 3 shares x $3 = $9
• Sale value: 3 shares x $4 = $12
• Loss: $12 — $9 = $3

Total Capital Gain:

• Gain from first parcel: $20
• Gain from second parcel: $3
• Total gain: $20 + $3 = $23

Therefore, the total capital gain from selling 13 shares is $23.

Navexa Portfolio Tracker: Automate Your CGT Strategy For Tax Reporting

You don’t need to worry about manually tracking your investment’s gains, income, and long-term returns.

The Navexa Portfolio Tracker automatically handles performance tracking and tax reporting for Australian investors.

Take a free 14-day trial and see for yourself why thousands of investors trust Navexa to track their portfolio and sort their investment taxes the easy way.