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An unrealised gain that accumulated before 1 July 1990 will not be taxed. Correspondingly, any unrealised loss accumulated up to that date will not be allowed. This is done by valuing the assets on 30 June 1990 and, in general, using that value as the consideration paid.
However, where an asset had decreased in value before 1 July 1990, the gain using the market value as the consideration paid could be bigger than the actual gain. Similarly, where the asset had appreciated in value before 1 July 1990, the loss using the market value as the consideration paid could be greater than the actual loss. In either of these cases, only the actual gain or loss is taken into account. To achieve this result, you must use as the consideration paid for such assets either the market value of the asset at 30 June 1990 or the actual cost base of the asset, whichever produces the smaller gain or loss. That is:
Last modified: 05 Dec 2006QC 17522
- in working out a gain, use the greater of the unindexed cost base and the market value on 30 June 1990
- in working out a loss, use the lower of the unindexed cost base and market value on 30 June 1990.