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  • How to calculate a capital loss

    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

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

    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

    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

    Last modified: 25 Feb 2020QC 27448