• Part D: Applying capital losses against current year capital gains
    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    In part D you show your entity's current year capital gains reduced by:

    • current year capital losses (CYCL), other than from collectables (stepD1)
    • prior year net capital losses (PYNCL), other than from collectables (stepD2) and
    • capital losses transferred in (for companies only-stepD3).
    Step D1: Apply current year capital losses (CYCL), other than capital losses from collectables

    If your entity has current year capital losses, other than capital losses from collectables, that can be deducted they must be deducted here. You cannot choose to defer to a later year any amount that can be deducted this year.

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    Have you shown current year capital gains (CYCG) for your entity at A7 to A12 in part D?

    NO

    Transfer D in part B to I in part I of the worksheet, then go to step D2.

    YES

    Does your entity have current year capital losses (CYCL) or prior year net capital losses (PYNCL), other than from a collectable, or capital losses transferred in?

    NO

    Transfer the amounts at A7 to A12 in partD to A to F in part E and continue on from part F.

    YES

    If your entity has CYCL, read on. If your entity has only PYNCL, transfer the amounts at A7 to A12 in part D to 3G to 3L in step D1 and then go to step D2. If your entity has only capital losses transferred in, go to step D3.

    You can choose the order in which you deduct your entity's current year capital losses (at D in part B) from the current year capital gains (at A7 to A12).

    Generally, if your entity is entitled to the CGT small business concessions, it is better to reduce the non-active asset capital gains first. Within the non-active and active categories the greatest benefit is usually obtained by reducing:

    1. capital gains calculated using the 'other' method, then
    2. capital gains calculated using the indexation method, then
    3. capital gains calculated using the discount method.

    At 3A to 3F, show the amounts of current year capital losses deducted in the order you have chosen with the total at H. At 3G to 3L, show the capital gains after applying (deducting) the current year capital losses.

    You can carry forward any unapplied current year capital loss other than from collectables (D in part B minus H) to reduce capital gains in later income years.

    When you have completed step D1, transfer the amount of unapplied current year capital losses (D minus H) to I-UNCL from other CGT assets in part I.

    Step D2: Apply any prior year net capital losses (PYNCL), other than PYNCL from collectables

    If your entity has prior year net capital losses, other than prior year net capital losses from collectables, that can be deducted, they must be deducted here. You cannot choose to defer to a later year any amount that can be deducted this year.

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    Does your entity have any current year capital gain (CYCG) remaining?

    NO

    If your entity has PYNCL, complete 4A, 4B, and 4C and transfer the amount at 4C to I in part I. Go to part E

    YES

    Does your entity have any PYNCL, other than collectables?

    NO

    If your entity is a company with capital losses transferred in, go to step D3. Otherwise, transfer 3G to 3L in step D1 to A to F in part E and continue on from part F.

    YES

    Read on

    Reduce the prior year net capital losses at 4A by any adjustment for commercial debts forgiven at 4B. For more information on commercial debts forgiven, see chapter 1-Debt forgiveness and refer to your entity's tax return instructions.

    Again, prior year net capital losses can be deducted from any remaining capital gains in the manner that produces the best result. See discussion for step D1. They must however be deducted in the order in which they were made-for example, a 1995-96 year capital loss must be deducted before a 1998-99 year capital loss.

    At 4D to 4I, show the amounts of prior year net capital losses (PYNCL) in the order you have chosen and the total at L. At 4J to 4O, show the capital gains after you have applied the current year capital losses and PYNCL.

    You can carry forward any unapplied prior year net capital losses (4C minus L) to reduce the capital gains in later income years.

    When you have completed step D2, transfer the amount of unapplied prior year net capital losses (4C minus L) to I-UNCL from other CGT assets in part I (together with any unapplied current year capital losses at step D1).

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    If your entity is a company with capital losses transferred in, go to step D3. otherwise, transfer the remaining capital gain amounts at 4J to 4O to A to F in partE.

    Step D3: Apply any capital losses transferred in

    Only follow this step if your entity is a company with capital losses transferred in.

    The capital losses transferred in to your entity need to be applied in the order they were received. Your entity must have enough capital gains to absorb the capital losses transferred in.

    When you have completed stepD3, transfer the amount of CYCG remaining after applying CYCL, PYNCL (4J to 4O in stepD2) and capital losses transferred in to A to F in part E.

    Last modified: 06 Oct 2009QC 27417