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  • Part B:  Sale of shares or units



    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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    Chapter B1:  How to work out your capital gain or capital loss

    To calculate your capital gain from the sale of shares or units in a unit trust (for example, a managed fund), the main steps are to:

    1. work out how much you have received from each CGT event (your capital proceeds)
    2. work out how much each CGT asset cost you (the cost base), and
    3. subtract 2 (the cost base) from 1 (the capital proceeds).

    If you received more from the CGT event than the asset cost you (that is, the capital proceeds are greater than the cost base), the difference is your capital gain. There are three ways of calculating a capital gain. These are:

    • the indexation method
    • the discount method, and
    • the 'other' method if you bought and sold your asset within 12 months (this is the basic method explained in the three steps above).

    For a more detailed description of these methods, see part A or the Explanation of terms.

    Note: New terms

    Some terms in this section may be new to you. The first time these words are used they are linked to their explanation under the heading Explanation of terms.

    While we have used the word 'bought' rather than 'acquired' in our examples, you may have acquired your asset without paying for it (for example, as a gift or through an inheritance). Similarly, we refer to 'selling' an asset, when you may have disposed of it in some other way (for example, by giving it away or transferring it to someone else). All of these transactions are CGT events.

    If you made a capital loss (that is, you received less from the CGT event than the asset cost you), you need to work out the reduced cost base for the asset. Generally, for shares, the cost base and reduced cost base will be the same. If the reduced cost base is greater than the capital proceeds, the difference is your capital loss.

    If the capital proceeds are less than the cost base, but more than the reduced cost base, you have not made a capital gain or a capital loss.

    The steps on the following pages show you the calculations you need to make to work out your capital gains tax obligation using the 'other' and the discount methods. If you want to use the indexation method (by indexing your cost base for CPI) you will need to do this at step 2. You may find the worked examples in chapter B2 easier to follow.

    Last modified: 06 Oct 2009QC 16182