Ripper Wealth

Foundations

Before you invest, get your house in order. Set goals, track cash flow, and build emergency reserves.

What To Own

Understanding asset classes and their roles in a balanced portfolio.

Why It Works

Historical context, wealth cycles, and the economic principles that drive markets.

AI-Powered Education

Cycle-aware tools backed by institutional-grade research

How To Execute

Profile-specific strategies. Content varies based on your persona (PAYG, Business Owner, Property/Crypto/Stock Investor, etc.).

When To Adjust

Timing and signals. Know when to buy, sell, or hold based on market cycles.

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TAX ESSENTIALS FOR STOCKS/ETFS • STEP 1 OF 4

Get Ready: Stock & ETF Tax Basics

The stock market is a device for transferring money from the impatient to the patient.

— Warren Buffett

Learn how dividends, franking credits, CGT discount, and wash sales work for Australian stock investors.

Your Learning Journey

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This Step Takes: 20 minutes

Understand dividends, discover franking credit magic, learn the 50% CGT discount, and avoid wash sale traps.

Why This Matters

Understanding stock tax saves $3-8k yearly.

Dividends & Franking Credits

When Australian companies pay dividends, they often come with franking credits—a tax credit for tax the company already paid.

The Simple Explanation

When a company earns $100 profit, it pays $30 company tax, leaving $70 to distribute as a dividend. That $30 tax the company paid? You get credit for it! If your personal tax rate is less than 30%, you can get a cash refund from the ATO. If it's higher, the credit reduces your tax bill.
Franked Dividends
Fully franked (100%): Company paid all 30% tax
Partially franked (e.g., 70%): Company paid 70% of the 30% tax
Most ASX blue chips (banks, miners) pay 100% franked dividends
Unfranked Dividends
Unfranked (0%): No tax paid (e.g., company made losses)
You pay full tax on unfranked dividends at your marginal rate
International stocks (e.g., VGS ETF) typically pay unfranked dividends

Real Example: $5,000 Fully Franked Dividend

Dividend you receive:$5,000
Franking credit (30% ÷ 70% × $5,000):+$2,143
Grossed-up dividend (assessable income):$7,143
If your tax rate is 19%:Tax on $7,143 = $1,357
Franking credit offset:-$2,143
Net result:$786 REFUND!

Try the Franking Credit Calculator

See exactly how much franking credits are worth to you based on your income.

Quick Franking Credit Example

Dividend received:$5,000
Franking credit (100%):$2,143
Grossed-up dividend:$7,143
If your tax rate is less than 30%:You get a refund!

The 50% CGT Discount

Hold shares for 12+ months and you only pay tax on 50% of your capital gain. This is huge.

Held Less Than 12 Months

NO Discount

Example: $20,000 profit
Taxable gain:$20,000
Tax (37% bracket):$7,400
After-tax profit:$12,600
Held 12+ Months

50% Discount

Example: $20,000 profit
Taxable gain (50%):$10,000
Tax (37% bracket):$3,700
After-tax profit:$16,300

💡The One-Day Rule

If you bought shares on 1 Jan 2024, you need to hold until 2 Jan 2025 to qualify for the 50% discount (365 days + 1 day). Selling on exactly 1 Jan 2025 = only 365 days = NO discount. This catches many investors out!

Applies To

Shares, ETFs, investment property, collectibles. Any CGT asset held 12+ months gets the discount.

Doesn't Apply To

Trading stock, personal use assets (like your car), or assets owned by companies (companies don't get CGT discount).

Wash Sales: The ATO Trap

Selling shares at a loss just to claim the tax deduction, then buying them straight back? The ATO is watching.

What is a Wash Sale?

A wash sale happens when you sell an asset at a loss to claim the tax deduction, then buy the same or a substantially similar asset shortly after. The ATO can deny your loss deduction if they determine you did this purely for tax avoidance purposes.

What NOT to Do

✗Sell BHP at a loss on 28 June, buy back on 2 July
✗Sell VAS (Aussie shares ETF), immediately buy A200 (also Aussie shares)
✗Sell at a loss in your name, buy back in spouse's name (same household)

Legitimate Tax Loss Harvesting

✓Sell a losing stock and don't repurchase (genuine sale)
✓Sell VAS, wait 30+ days before buying VAS again
✓Sell VAS, buy a genuinely different asset (e.g., VGS international)

The Safe Approach

If you genuinely want to realise a loss for tax purposes but maintain market exposure:

  1. Sell the losing position (e.g., VAS)
  2. Wait at least 30 days (no magic number, but 30+ is safer)
  3. Then rebuy if you still want exposure
  4. Or switch to a different but similar asset (VAS → A200) and document your reasoning

Tax-101 for Stocks - Get Ready: Complete

  • Franking credits give you a tax refund if your rate is less than 30%—huge for retirees and lower-income investors
  • Hold shares 12+ months (365 days + 1 day) to get the 50% CGT discount—this can save thousands
  • Wash sales (sell for loss, rebuy immediately) can be denied by the ATO—wait 30+ days or switch to a different asset

Homework

Reflect

Do you currently track your share purchase dates? Are you maximising franking credits and CGT discount opportunities?

Action

Check your share purchase dates today. If any are close to 12 months, mark your calendar to ensure you hold past the discount threshold before selling.

What's Next?

20 minutes