A ray of sunshine from the graveyard
Pierpont
Australian Financial Review
25 June 2004

In his usual role as a little ray of sunshine, Pierpont can bring joy into his readers' lives this week. The sunshine will be of particular joy to any reader who has ever held shares in a busted company. Judging by the emails Pierpont receives on his website, such people must comprise an alarmingly high proportion of your correspondent's audience.

Anyhow, the good news is that Pierpont has discovered a way of getting a tax loss on stock in companies that have hit the wall. This makes Pierpont a harbinger of light because many a reader has complained bitterly to him in the past that they could not persuade the taxman to recognise sharemarket wipe-outs.

Let's say Peter the Punter had bought $10,000 worth of, say, Antaeus Energy, which has been down the tubes for nearly five years. If Peter had been able to unload the stock for $10 to some dill before it delisted, he could have claimed a tax loss of $9990.

But if Peter hadn't got out in the panic rush before Antaeus hit the wall, he would still be holding 100 percent of the loss because when a company goes into receivership or some other form of insolvency, before you can flog the stock, the ATO will not recognise the loss unless the liquidator, or whoever, makes a formal declaration that the company is cactus, and they don't always bother doing that.

So heaps of the Australian population are sitting around with scrip that is good only for wallpaper but can't claim the loss against tax. But now they can, or at least for a fair few recently busted companies.

Pierpont discovered this when a reader alerted him to a website named www.delisted.com.au. This site, run by Tony McLean (formerly the Australian Shareholders Association) and supported by the ASX, buys dead stock in nominated companies.

The list of nominated companies reads like a Madame Tussauds of the ASX. Pierpont, although hardened by his attendance at many a corporate post mortem, could scant repress a shudder as he looked down the list and struck names such as Alamain, Australian Kaolin, Aust-wide, Diamond Rose, IPWorld, Koala Corporation, Metabolism Health, National Textiles and (especially gruesome) Pasminco.

Delisted will buy Peter's stock for $1 and charge him $77 in administration fees. This is netted out so that Peter simply sends Delisted $76 and can then claim a $9999 loss on Antaeus. He can also claim the $77 administration fee.

Delisted makes a profit on the $76 less its costs (website maintenance, registry checking, etc). Everyone's happy, justice is served and Delisted is providing a much overdue service in the corporate graveyard. So if you've got some dead stock and want to claim a loss, Pierpont suggests you do some brisk business with Delisted before June 30.

While scanning the Delisted site, incidentally, Pierpont noted that Tony McGrath, as liquidator of HIH, has made a formal declaration that its shares are worthless. Actually, it was made two years ago, but as the advice was never mailed out, many HIH shareholders may have missed it. The site is worth checking for little gems such as that.