Calculating a capital loss

Generally, you make a capital loss if your reduced cost base is greater than your capital proceeds. The excess is your capital loss.

Example

Capital works deduction: effect on reduced cost base

Antonio acquired a new income-producing asset on 28 September 1999 for $100,000 including stamp duty and legal costs. He sold it for $90,000 in November 2011. During the period he owned it, he claimed capital works deductions of $7,500 for expenditure he incurred. Antonio works out his capital loss as follows.

Cost base	$100,000
less capital works deductions	$7,500
Reduced cost base	$92,500
less capital proceeds	$90,000
Capital loss	$2,500

Example

Capital loss (reduced cost base greater than capital proceeds)

In July 1996, Chandra bought 800 shares at $3 per share. He incurred brokerage fees and stamp duty of $100. In December 2011, Chandra sold all 800 shares for $2.50 per share. He incurred brokerage fees of $75. He made a capital loss, calculated as follows.

Calculation of reduced cost base

Date expense incurred	Description of expense	Expense
July 1996	Purchase price	$2,400
July 1996	Brokers fees and stamp duty	$100
December 2011	Brokers fees and stamp duty	$75
Reduced cost base		$2,575

Calculation of capital loss

Reduced cost base	$2,575
Capital proceeds 800 x $2.50	$2,000
Capital loss	$575

However, the reduced cost base is not relevant for some types of CGT events. In these cases, the particular CGT event explains the amounts to use (see Summary of capital gains tax events).

Reduced cost base You cannot index a reduced cost base.

More information

For an overview of capital gains tax, see Introduction to capital gains tax. For help applying this to your own situation, phone 13 28 61.