• ### Using the Capital gain or loss worksheet for shares

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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 the examples on the following pages, Tony uses the indexation method, the discount method and the 'other' method to calculate his capital gain so he can decide which method gives him the best result. This example shows you how to complete the Capital gain or loss worksheet in this guide to calculate your capital gain when you acquire or dispose of shares.

Refer to chapter 2 for a description of each method and when you can use each one.

Remember that if you bought and sold your shares within 12 months, you must use the 'other' method to calculate your capital gain. If you owned your shares for 12 months or more, you may be able to use either the discount method or the indexation method, whichever gives you the best result.

Example
Using all three methods to calculate a capital gain

On 1 July 1993, Tony bought 10 000 shares in Kimbin Ltd for \$2 each. He paid a stockbrokers fee of \$250 and stamp duty of \$50.

On 1 July 2000 Kimbin Ltd offered each of its shareholders one right for each four shares owned to acquire shares in the company for \$1.80 each. The market value of the shares at the time was \$2.50.

On 1 August 2000, Tony exercised all rights and paid \$1.80 per share.

On 1 December 2000 Tony sold all his shares in Kimbin Ltd for \$3.00 each. He incurred a stockbrokers fee of \$500 and stamp duty of \$50.

Note
Separate records

Tony has two parcels of shares-those he acquired on 1 July 1993 and those he acquired at the time he exercised all rights, 1 August 2000. He needs to keep separate records for each parcel and apportion the stockbrokers fee of \$500 and stamp duty of \$50.

The completed capital gain or loss worksheets which you can download here show how Tony can evaluate which method gives him the best result.

He uses the 'other' method for the shares he owned for less than 12 months, as he has no choice:

\$7500-\$4610 = \$2890

For the shares he has owned for 12 months or more, his capital gain using the indexation method would be:

\$30 000-\$23 257 = \$6743

This means his net capital gain would be:

 \$2890 + \$6743 = \$9633 ('other' method) (indexation method) (net capital gain)

If Tony uses the discount method instead (assuming he has no losses), his capital gain would be:

\$30 000-\$20 740 = \$9260

He applies the CGT discount of 50%:

\$9260 x 50% = \$4630

This means his net capital gain would be:

 \$2890 + \$4630 = \$7520 ('other' method) (discount method) (net capital gain)

In this case he would choose the discount method rather than the indexation method, as it gives him the best result (less capital gains).