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The notional net capital gain is worked out as a step in calculating the amounts at V and Z. Do not show this amount at net capital gain label W. The notional net capital gain is used instead of your actual net capital gain in working out your additional tax from the removal of averaging. If your notional net capital gain is zero, you will not have any additional tax from the removal of averaging. In that case, you will not have any CGT averaging reduction so will not need to complete labels V and Z.
Your notional net capital gain is the amount that would have been your net capital gain if the changes involving frozen indexation, the CGT discount and the new small business CGT concessions had not been made to the tax law from 11.45 am on 21 September 1999.
To calculate the notional net capital gain, capital gains made throughout the 1999-2000 year are worked out using the indexation rules applying in the first part of the year, and without the CGT discount rules (for further information refer to Indexation and the CGT discount). For example, a discount capital gain made in December 1999 is recalculated to include (where otherwise allowable) indexation in the cost base. The indexation is worked out using the index number for the December 1999 quarter. The gain is not reduced by the discount percentage. Capital losses, and capital gains made up to 11.45 am on 21 September 1999, will not need to be recalculated.
If your taxable income includes a share of the net income of a trust, and the share includes part of the trust's net capital gain, ignore any capital gain you are taken to have under the new rules concerning net capital gains in shares of trust income (see Capital gains, trusts and the CGT concession) . In working out your notional net capital gain, include instead a proportion of the notional net capital gain of the trust. The proportion you include would be the same as the proportion of the trust's net capital gain attributable to your share of the trust's net income. For example, if this is one half of the trust's net capital gain, and assuming that the trust's net capital gain is less than its net income, include one half of the trust's notional net capital gain in your notional net capital gain. You would obtain this information from the trustee.
Finally, the notional net capital gain is also worked out as though the former small business CGT concessions (the 50 per cent goodwill exemption, and the versions of the small business retirement exemption and the small business roll-over which applied before 11.45 am on 21 September 1999) applied for the whole year, and the new small business CGT concessions did not apply. Any former concession you apply in working out your notional net capital gain must be one that would have been available in your actual circumstances.
Last modified: 18 Sep 2009QC 18323