• The 'other' method

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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.

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    This is the simplest of the three methods. You must use the 'other' method to calculate your capital gain if you have bought and sold your asset within 12 months or generally for CGT events that do not involve an asset. In these cases, the indexation and discount methods do not apply.

    Generally, to use the 'other' method, you simply subtract your cost base (what the asset cost you) from your capital proceeds (how much you sold it for). The amount of proceeds left is your capital gain. For some types of CGT events, a cost base is not relevant. In these cases, the particular CGT event explains the amounts to use.

    Example - Calculating a capital gain using the 'other' method

    Marie-Anne bought a property for $150,000 under a contract dated 24 June 2003. The contract provided for the payment of a deposit of $15,000 on that date, with the balance of $135,000 to be paid on settlement on 5 August 2003.

    Marie-Anne paid stamp duty of $5,000 on 20 July 2003. On 5 August 2003, she received an account for solicitors fees of $2,000 which she paid as part of the settlement process.

    Contracts for the sale of the property for $215,000 were exchanged on 15 October 2003. Marie-Anne incurred costs of $1,500 in solicitors fees and $4,000 in agents commission.

    As she bought and sold her property within 12 months, Marie-Anne must use the 'other' method to calculate her capital gain.

    Deposit

    $15,000

    Balance

    $135,000

    Stamp duty

    $5,000

    Solicitors fees for purchase of property

    $2,000

    Solicitors fees for sale of property

    $1,500

    Agents commission

    $4,000

    Cost base (total)

    $162,500

    Marie-Anne works out her capital gain as follows:

    Capital proceeds

    $215,000

    less cost base

    $162,500

    Capital gain calculated using the 'other' method

    $52,500

    Assuming Marie-Anne has not made any other capital losses or capital gains in the 2003-04 income year and does not have any prior year net capital losses, the net capital gain to be included at item 17 on her tax return is $52,500 (item 9 if she uses the tax return for retirees).

    End of example
    Last modified: 04 Mar 2016QC 27527