Working out your net capital gain/loss
Once you have your capital gain or capital loss for each CGT asset, you need to work out your net capital gain or capital loss for the year.
Net capital gain
Your net capital gain is:
your total capital gains for the year (including those distributed by a managed fund or trust)
your total capital losses (including any net capital losses from previous years)
any CGT discount and CGT small business concessions you are entitled to.
Net capital loss
If your total capital losses for the year exceed your total capital gains, your net capital loss is:
your total capital losses (including any net capital losses from previous years)
your total capital gains for the year (including those distributed by a managed fund or trust).
You cannot deduct a net capital loss directly from your income, but you can carry it forward and deduct it from capital gains in later income years.
There is no time limit on how long you can carry forward a net capital loss.
You must apply your capital losses against your capital gains in the order in which you made them. You can't choose not to apply capital losses against capital gains if you have them, however, you can choose which capital gains to deduct your losses from.
Net losses from collectables can only be deducted from capital gains made from collectibles, not from other capital gains.
There are some restrictions on whether or how companies and trusts handle capital losses and there are some capital losses that you must disregard.
Company losses
Your company is entitled to deduct net capital losses from current year capital gains as long as it has either:
- substantially maintained the same ownership and control, or
- carried on the same business.
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For more information, refer to Continuity of ownership, control, and same business tests in the Guide to tax losses.
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Trust losses
Capital losses made by a trust cannot be distributed to the trust's beneficiaries. They can be carried forward and applied against capital gains in future years.
Capital losses you must disregard
You must disregard any capital loss you make:
- from a personal use asset
- from some collectables
- from a lease (whether the result of expiry, forfeiture, surrender or assignment) unless it is used solely or mainly for producing assessable income, for example, a lease on a commercial rental property or a car
- from paying personal services income if the income is included in an individual's assessable income under the alienation of personal services income provisions, or any other amount attributable to that income
- as an exempt (from income tax) entity - this rule ensures that if the status of an exempt entity changes and it becomes taxable, its losses are not carried forward to become deductible from assessable capital gains.
Sections within Working out your capital gain/loss
Last Modified: Wednesday, 30 January 2013