• #### How to calculate a capital loss

Warning:

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

Example

Antonio acquired a new income-producing asset on 28 September 1999 for \$100,000, including stamp duty and legal costs. He sold it for \$90,000 in November 2006. During the period he owned it, he was allowed capital works deductions of \$7,500. Antonio works out his capital loss as follows.

 Cost base \$100,000 less capital works deductions \$7,500 Reduced cost base \$92,500 less capital proceeds \$90,000 Capital loss \$2,500

End of example

Example

In July 1996, Chandra bought 800 shares at \$3 per share. He incurred brokerage and stamp duty of \$100. In December 2006, Chandra sold all 800 shares for \$2.50 per share. He incurred brokerage of \$75. He made a capital loss, calculated as follows.

Calculation of reduced cost base

Date expense incurred

Description of expense

Expense

July 1996

Purchase price

\$2,400

July 1996

Brokers fees and stamp duty

\$100

December 2005

Brokers fees

\$75

Reduced cost base

-

\$2,575

 Reduced cost base \$2,575 Capital proceeds 800 × \$2.50 \$2,000 Capital loss \$575

However, the reduced cost base is not relevant for some types of CGT events. In these cases, see appendix 1 for the amounts to use for the particular CGT event.

Reduced cost base

You cannot index a reduced cost base.

End of example