The Australian Share Trading Guide (2021)
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Do you have some shares that you're considering selling? It's possible that a family member passed them down to you, that someone gave them to you as a present, or that you purchased them a very long time ago. Regardless of the circumstances, you are looking for a method that is quick, uncomplicated, and within your price range, but where do you even begin?
In this guide, we will walk you through the steps necessary to sell shares with as little hassle as possible.
The manner in which the registration of your legal title to the shares comes first among the considerations that are required of you. There are two types of sponsorship for shares: broker sponsorship and issuer sponsorship.
- Shares that are sponsored by a broker These are also sometimes referred to as CHESS holdings or CHESS-sponsored shares. Another common name for them is CHESS shares. Clearing House Electronic Subregister System, or CHESS for short, is the system that the ASX utilizes to record shareholdings and manage trade settlement. CHESS is also known as CHESS. The Australian Securities Exchange (ASX) manages broker-sponsored shares through a sponsoring broker, such as CommSec or nabtrade. If you own these particular types of shares, you will be given a Holding Identification Number, also known as an HIN. This will be indicated on your most recent dividend or holding statement as "X," and it will also begin with this letter.
- IPOs, or initial public offerings. The company that initially issued these shares is the one responsible for their management. The vast majority of businesses rely on third-party share registries like Computershare or Linkmarkets to manage their registries on their behalf. There is a strong possibility that you possess issuer-sponsored shares if the shares were passed down to you in an inheritance or were given to you as a gift by another party. A Securityholder Reference Number, also known as an SRN, will have been allotted to you if you are the owner of issuer-sponsored shares. This will be indicated on your most recent dividend or holding statement and begins with the letter "I."
- Custodian If your shares are held in a custodian model account and the share trading platform that was used to purchase them is no longer in existence, you may need to contact the custodian in order to organize the sale of your shares. This can be done by calling or emailing the custodian.
After you have identified the kind of shares that you hold in a company, the next step is to devise a strategy for selling those shares. However, the procedure for selling broker-sponsored shares and issuer-sponsored shares is not the same.
If you own CHESS-sponsored shares, you can sell them through the same broker who helped you buy those shares in the first place.
You will have to transfer the shares to your account with the new broker if you want to sell them through a different broker. First, conduct research to identify the stock trading platform that best suits your needs, and then register for an account with the platform that you decide to use.
In order to move the shares over to your new broker, you will need to fill out a transfer form with the previous one. After that, it will get in touch with your previous broker to arrange the transfer, and once that is finished, you will be able to place a sell order through your online share trading account.
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Selling shares that have been sponsored by the issuer can be a little more complicated. There are a few different courses of action that can be taken:
- The sale will take place through the share registry. The first choice available is to sell your shares through a registry company directly, such as Computershare or Link Market Services. You will be required to provide your SRN, contact information, and a valid form of identification. It is possible to close the deal through the online platform. However, there are transaction limits and fees associated with the service.
- Utilizing the services of a broker to sell. The second option is to sell the shares after transferring them from the registry to your broker. This can be done in either order. You will typically be required to provide your SRN and complete the transfer through your online share trading account in order to accomplish this. Your broker will be able to walk you through the specific steps involved in carrying out this process in a step-by-step manner.
On the other hand, it is important to be aware that certain major brokers do not provide one-time share trading services. Before you are allowed to sell your shares, you will first need to open a stock trading account, which requires you to present a valid form of identification and connect a bank account to the account.
One-time sales are supported on some platforms, which is convenient for individuals who do not require or wish to maintain a trading account. You will need to examine all of these service providers and the prices that they charge in order to select the one that best suits your needs.
When you sell shares, you will be required to pay a brokerage fee. This fee can differ from platform to platform, as well as depending on whether you are making a one-time sale or selling through your regular online share trading account. Additionally, fees change based on the magnitude of the transaction; therefore, it is important to read the fine print in order to obtain complete information.
When you sell through a share trading account held with one of the Big Four banks, you will be subject to the fees listed below:
It is also important to note that you will be required to pay an additional fee of approximately $10–$15 when selling issuer-sponsored shares through a broker. When it comes time to sell shares, using our guide to finding cheap stock brokerage can help you save money on fees and charges.
If you sell your issuer-sponsored shares through a share registry, you will also be required to pay brokerage fees. As an illustration, Computershare levies a brokerage fee of $110 on trades that are up to $5,000 in value.
Lastly, if you are making a one-time sale through a broker that is compatible with this service, you may be subject to a flat brokerage fee (typically ranging from $40 to $200) or a fee that is calculated as a percentage of the total amount of your transaction, whichever is greater. This occurs when you make a one-off sale.
The procedure for selling shares that you have inherited from a relative who has passed away can also vary depending on the type of shares.
In the event that ownership of the shares has been transferred into your name, the process of selling them is relatively uncomplicated, and you can proceed in accordance with the steps that have been outlined above. However, if the shares are still held in the name of the deceased individual's estate, you will be required to provide supplementary documentation, such as copies of the will, the probate paperwork, and the death certificate.
You should also keep in mind that even though you are exempt from paying tax on shares that you inherit, you might be required to pay capital gains tax if and when you decide to sell those shares.
You might also find yourself in a situation where a company makes you an offer to buy back some or all of the shares you already own if they decide to do so. This practice is referred to as a "share buyback."
Companies are able to offer higher returns to their shareholders, consolidate ownership, and increase the value of their shares through the use of buyback programs. Buybacks can take place off-market, which means that the company will communicate with its shareholders directly, or they can take place on-market, which means that the company will purchase its own shares through the ASX.
Participating in a share buyback will require you to give some thought to the obligations you have regarding the taxation of capital gains. Off-market buybacks make these considerations slightly more difficult; therefore, you should consult your accountant before making any decisions.
Gifting your shares to another individual is yet another alternative you have at your disposal. You are able to accomplish this goal without actually selling shares on a stock exchange by engaging in a process that is referred to as an off-market transfer. This action enables you to transfer the ownership of shares to a third party.
The broker or share registry that is in charge of the shares may have a slightly different procedure to follow in order to successfully complete an off-market transfer. In most cases, you will be required to fill out a form with the name, contact details, SRN/HIN, and trading account details of both you and the recipient; for complete instructions, you should get in touch with the broker or the share registry.
In addition to that, an off-market transfer fee will need to be paid. This will typically cost you between $25 and $55, but some brokers will waive the fee if you're transferring shares to another person who already has an account on the same platform as you do.
Check out our guide to off-market transfers with the Big Four banks for more information about the process.
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