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How to calculate a capital loss

Last updated 24 February 2020

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

Start of example

Example: Write-off

Antonio acquired a new income-producing asset on 28 September 1999 for $100,000. He sold it for $90,000 in November 2002. During the period he owned it, he was allowed write-off deductions of $7,500. Antonio works out his capital loss as follows.

Cost base

$100,000

less write-off deduction

$7,500

Reduced cost base

$92,500

less capital proceeds

$90,000

Capital loss

$2,500

 

End of example
Start of example

Example: Capital loss (reduced cost base greater than capital proceeds)

In July 1996, Chandra bought 800 shares at $3 per share. He incurred brokerage and stamp duty of $100. In December 2002, Chandra sold all 800 shares for $2.50 per share. He incurred brokerage of $75. He made a capital loss, calculated as follows.

Date expense incurred

Description of expense

Expense

July 1996

Purchase price

$2,400

July 1996

Brokers fees and stamp duty

$100

December 2001

Brokers fees and stamp duty

$75

-

Reduced cost base

$2,575

Calculation of capital loss

Reduced cost base

$2,575

Capital proceeds 800 × $2.50

$2,000

Capital loss

$575

 

End of example

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 appendix 1: Summary of CGT events).

Note: Reduced cost base

You cannot index a reduced cost base deduction

QC84747