ASX set to fall 03 BGH pulls out of 13bn offer for Hansen Tech
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What better way to start the week than a reminder that day-traders will have to pay tax on all those micro-transactions, ETFs, and rockets they bought during the year.
The Australian Tax Office this morning came out with a warning to people who jumped into the stock market over the past 18 months.
Australia and the US treat profits from trading shares very differently when it comes to tax time, which might be a shock to some new traders. Credit:AFR
“First-time investors often misunderstand their tax obligations in relation to reporting capital gains from the sale of shares and income in the form of dividends and distribution, †the ATO said.
They are particularly worried about ‘micro-investment platforms’. They also noted information will be pre-filled from brokers and share registries for about 612,000 taxpayers have made 5.8 million transactions, or about 9.5 transactions each.
It’s a stark reminder that different jurisdictions tax shares very differently - Australia charges full capital gains tax on assets held less than a year, whereas the US adds short-term gains to ordinary income. But, Australia has a generous tax treatment of dividends.
“Exchange-traded funds (ETFs) are an increasingly popular investment option amongst millennials. Several micro-investing mobile platforms operate as managed investment funds that purchase ETFs. Investors then buy units in the ETF using the micro-investing app on their phones,†the ATO said, adding even micro-investing attracts tax.
And for those who chose some real stinkers during the year, the ATO says they are welcome to claim capital losses to off-set capital gains on their winners. But the stocks must have been sold at a loss and can only be claimed against trading gains.
“Each year we see some enterprising entrepreneurs trying to offset their capital losses against income tax applied to other income, such as salary and wages,″⣠ATO assistant commissioner Tim Loh said.
“Others attempt to offset a ‘paper loss’ against actual income.″â£
He helpfully adds some record keeping tips. Make sure you include trading dates, prices, commissions, sales, brokerage costs, share splits, share considerations, mergers and demergers.
Private equity firm BGH Capital has withdrawn its $6.50 per share offer for Hansen Technologies after poring over its books and coming to the conclusion it does not want to pay $1.3 billion for the Melbourne-based software company.
“Having conducted extensive due diligence inquiries in relation to the company, BGH has not notified Hansen of any issue which Hansen considers material in the context of Hansen’s current operations and strategy,†the ASX-listed company told the market this morning.
“BGH Capital has advised the company that it continues to see Hansen as a highly effective organisation with an outstanding management team and strong prospects.â€
The unsolicited proposal has been withdrawn and the process and exclusivity deed between the parties is terminated.
Chairman David Trude said Hansen reported record results across all areas in 2020-21 and it is still expecting to reach revenue of $500 million in 2024-25.
Hansen shares were trading around $5.20 before the offer was made in June and then jumped by about $1. Shares closed at $6.17 on Friday.
Major stock indexes on Wall Street closed mostly lower Friday, though a rally in Big Tech companies nudged the Nasdaq to another all-time high.
The S&P 500 fell less than 0.1 per cent a day after notching a record high. The benchmark index still managed its second straight weekly gain. Losses in financial, industrial and utilities companies outweighed gains in technology stocks and other sectors of the S&P 500. Energy prices mostly fell. Gold and silver rose. Treasury yields were mixed.
Stock indexes’ uneven finish followed a government report showing that U.S. employers created far fewer jobs than expected last month. The report led investors to question whether the delta variant is starting to impact economic growth.
“Investors are saying, ‘looks like this transition from reopening to a reopened economy is going to take a little bit longer’,†said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management.
Weaker than expected jobs numbers shows the US recovery might take a little longer than expected. Credit:AP
The S&P 500 slipped 1.52 points to 4,535.43. The Dow Jones Industrial Average fell 74.73 points, or 0.2 per cent, to 35,369.09. The Nasdaq composite rose 32.34 points, or 0.2 per cent, to 15,363.52, its third straight gain. The technology-heavy index also posted a weekly gain.
The indexes’ moves were mostly muted ahead of a long holiday weekend. U.S. stock markets will be closed Monday for Labor Day.
Investors focused Friday on a key barometer of economic health: the Labor Department’s monthly snapshot of hiring by non-farm companies. The report found that America’s employers added just 235,000 jobs in August, a surprisingly weak gain after two months of robust hiring, at a time when the coronavirus’ highly contagious delta variant’s spread has discouraged some people from flying, shopping and eating out.
The August job gains fell far short of the big gains in June and July of roughly 1 million a month. Those gains followed widespread vaccinations that allowed the easing of many pandemic restrictions.
Technology stocks did particularly well last year during the pandemic, so it was unsurprising to see traders move back into those investments again. Broadcom and NetApp each rose 1 per cent or more.
Travel companies took some of the heaviest losses.
Friday’s weak jobs report could actually benefit stock investors over the longer run. The Federal Reserve has indicated it might begin winding down its bond purchases of $US120 billion a month that pump money into the financial system until they have more data that the U.S. recovery is on solid footing. The report may help prompt Fed policymakers to delay those plans.
Bond yields moved higher. The yield on the 10-year Treasury note rose to 1.32 per cent from 1.30 per cent the day before.
Good Morning, and welcome to another week of ASX coverage with the Markets Live team.
Your editors today are Lucy Battersby, and Colin Kruger.
Australia is awaiting direction from the RBA this week which is tipped to delay tapering or even extend its bond-buying program as lockdowns threaten economic growth.
The Australian sharemarket finished 0.5 per cent strong on Friday, rising 37 points to 7,522.9 with mining companies and biotech firms halting a two-day slide.
This blog is not intended as financial advice.
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