It’s nearly June, so S&P/ASX 200 Index (ASX: XJO) investors should start considering their tax affairs for FY20. Given death and taxes are the only certainties in life, it’s worth considering them. A tax outcome should rarely, if ever, dictate your investment decisions, but paying the right amount of tax can add thousands to your wealth over time.

Here are a few things that you can do to prepare for tax time and ensure that you are paying the right amount.

Sell some investments

There are a million reasons to sell an investment, but the main ones should be because your thesis is broken or your portfolio allocations need adjusting. I’ve only ever sold a few investments, but Telstra Corporation Ltd (ASX: TLS) was one of them, because my thesis was broken.

Many investors will have heard of capital gains tax (CGT) loss selling. This is where you sell an investment at a capital loss, because you want to use the capital loss now or in the future. If you know that you are going to have a capital gain on other investments in FY20, it may be possible to reduce these gains from carried forward capital losses or capital losses you make in the same year. Be careful when you do this, however, as there are tax avoidance rules about selling and buying back the same shares. As always, you shouldn’t do this just for tax reasons.

Less investors will have thought about CGT gains selling. If you have been thinking about selling some of your investments that are in a gain position, before 30 June may be the time to do it. With COVID-19 impacting many people’s livelihood, taking profits may be a good idea if you are going to be in a lower margin tax rate than normal.

Speak to your trusted business advisor

Like investing, tax planning is based on your personal circumstances. If you don’t want to read through pages of the ATO website and legislation, your registered tax agent and accountant will be best positioned to understand your financial position and what is available to you. You should speak to them about the above and any other options available to you.

Foolish takeaway

Tax shouldn’t be what drives your investment decisions, but it should be a consideration. ASX investors should target outperforming the ASX 200 index return, after fees and taxes. Legally lowering your average lifetime tax rate can significantly increase your annualised growth rate and wealth over time.

More reading

• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• The ASX 200 stocks in the tax-loss selling firing line
• 2 unbelievable ASX 200 value shares to buy today
• Why didn’t Warren Buffett buy more shares in the recent bear market?
• ASX 200 up 1.8%: Big four banks jump higher, Flight Centre and Webjet rocket again

Motley Fool contributor Lloyd Prout has no position in any of the stocks mentioned and expresses his own opinions. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post What ASX investors can do before 30 June to save tax appeared first on Motley Fool Australia.

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The LiveHire Ltd (ASX: LVH) share price is rocketing higher today on the back of a new contract win. After being up by as much as 22.73% in early trade, LiveHire shares have pulled back somewhat to sit at an 11.36% gain for the day at the time of writing.

About LiveHire

LiveHire is a recruitment platform that enables employers to keep digital track of candidates within one ecosystem. According to LiveHire, its platform can help save its enterprise clients time and money by streamlining the recruitment process and potentially even cutting out recruiters’ sky-high fees. 

LiveHire was founded in 2011 in Melbourne and went on to publicly list on the ASX in 2016 at an initial public offering price of 20 cents per share. The company’s client base includes leading brands like Vodafone, Asics, Nissan, and Xero Limited (ASX: XRO).

What did LiveHire announce?

Shortly before market open this morning, LiveHire revealed it has won a contract with the Victorian State Government to provide technology to help deploy staff into critical areas of need.

More specifically, the state government will use LiveHire’s platform to profile, match, and engage current employees in order to transition them into critical roles across the state government.

According to the announcement, the Victorian government contract is approximately 8 times the average annualised recurring revenue per client across LiveHire clients. 

The initial term of the contract is 12 months, and the state government has the option to extend the term for a further 12 months.

Commenting on the contract win, CEO Christy Forest said:

“LiveHire has unique capabilities in search, match, skills profiling and personal communications, making our solution highly suitable for organisations which are now increasingly required to bring a more agile approach to workforce mobility.”

“Similar to our work for other Australian State Governments, we will leverage our platform to assign well-fitted, available employees to in-demand roles from a newly created Talent Community for Victoria’s Jobs and Skills Exchange,” she added.

While today’s announcement was welcome news for investors, it’s important to note that LiveHire is on the smaller end of the ASX in terms of market capitalisation. Factoring in the 11.36% share price rise at the time of writing, LiveHire shares have a market capitalisation of just $74 million.

More reading

• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• What ASX investors can do before 30 June to save tax
• The ASX 200 stocks in the tax-loss selling firing line
• 2 unbelievable ASX 200 value shares to buy today
• Why didn’t Warren Buffett buy more shares in the recent bear market?

Cathryn Goh owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Small-cap ASX tech share rockets 23% higher on government contract win appeared first on Motley Fool Australia.

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The end of the financial year could complicate the recovery of some beaten down ASX shares.

These underperforming stocks on the S&P/ASX 200 Index (Index:^AXJO) may see the rebound in the share prices capped by shareholders looking to unload these losers for tax-loss purposes before the June 30 deadline.

If you aren’t already thinking about the tax implications for the financial year, you should be!

Waiting longer for a recovery

This is particularly so because the V-shaped economic recovery that many were hoping to see once the COVID-19 emergency passed is unlikely to materialise.

The debate is now focused on whether we will get a “U” or “L” shaped recovery instead. This means the short- to medium-term outlook for some coronavirus-impacted shares is likely to stay dim.

No point holding on to some of these losers if you can utilise the loss to offset your capital gains liabilities, especially if you think you can buy these laggards back later at a discount or around the same price.

What’s tax-loss selling?

For those who need a refresher on what tax-loss is, if you sell a stock below what you paid, the loss can be used to offset any profit you make on other investments.

For instance, if you made a loss of $100 on a stock and made a $100 profit on another, your capital gains liability is likely to be zero. You should check with your accountant to ensure you stay within the rules.

You should also note that the tax office takes a dim view of those who sell a stock for tax loss and then buy it back almost immediately. Again, be sure to speak to your tax professional for advice.

Poor foundations

But coming back to stocks that I believe make ideal tax-loss selling candidates, there are several that come to mind.

One stock that fits the bill is building materials group Boral Limited (ASX: BLD). The Boral share price was already under pressure before the COVID-19 disaster due to poor management that drove multiple profit downgrades.

The market’s patience ran out and this forced its chief executive Mike King to announce his departure in August.

The transition to a new leader usually marks a volatile period for shareholders. Newly installed chief executives of embattled companies almost always make dramatic cuts and changes that includes big write-down of assets.

A better option to Boral

If you are hanging on because you believe construction activity in the US and Australia will experience a speedy recovery, you probably would do better buying its better run rival James Hardie Industries plc (ASX: JHX).

Sure, you will be paying a premium for the switch, but you are getting a higher quality investment – and it’s particularly worth paying for quality during highly uncertain periods.

Weak properties

Another group of stocks that I think make good tax-loss selling targets are those own shopping malls and apartment projects.

I can’t see a V-shape recovery for this group and I am not swayed by arguments that their shares are trading below book value.

The problem is that there is lots of room to lower the value of their assets if structural changes to mega malls are afoot.

The outlook for apartment sales are also bleak as this segment of the property market is overly dependent on property investors and international students.

Examples of companies exposed to these thematic are Vicinity Centres (ASX: VCX), Stockland Corporation Ltd (ASX: SGP) and Mirvac Group (ASX: MGR).

Clipped wings

A third example of a stock that I see little reason to hang on to for the near term is Flight Centre Travel Group Ltd (ASX: FLT). The Flight Centre share price made a very decent 60% bounce since its March bottom and is ripe for tax loss selling for those who have been in the stock for a while.

Shares in the travel agent is still down close to 70% this financial year and international travel is one of the last few industries to return to “normalcy” (whatever that looks like in the post-coronavirus world).

Its cost base is also higher than online rivals as it operates brick and mortar shops. I reckon there’s time to buy back the stock later when more of the COVID-19 dust has settled.

The wild card is government support. There’s speculation that the federal government may extend a financial helping hand to industries most stricken by the pandemic.

However, I would rather back other travel related stocks if I wanted to take a punt on the government stimulus.

More reading

• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• What ASX investors can do before 30 June to save tax
• 2 unbelievable ASX 200 value shares to buy today
• Why didn’t Warren Buffett buy more shares in the recent bear market?
• ASX 200 up 1.8%: Big four banks jump higher, Flight Centre and Webjet rocket again

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc. Connect with me on Twitter @brenlau.

The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The ASX 200 stocks in the tax-loss selling firing line appeared first on Motley Fool Australia.

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