• Step 4 Applying capital losses against capital gains

    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

    If you have no capital losses from assets you disposed of this year and no unapplied net capital losses from earlier years, go to step 5.

    If you made any capital losses this year, deduct them from the amount you wrote at H. If you have unapplied net capital losses from earlier years, deduct them from the amount remaining after you deduct any capital losses made this year. Deduct both types of losses in the manner that gives you the greatest benefit.

    Deducting your losses

    You will probably get the greatest benefit if you deduct capital losses from capital gains distributed from the fund in the following order:

    1

    capital gains calculated using the 'other' method

    2

    capital gains calculated using the indexation method, and then

    3

    capital gains calculated using the discount method.

    If the total of your capital losses for the current year and unapplied net capital losses from earlier years is greater than your capital gains for the current year, go to step 7.

    Example 23: Deducting capital loss

    If Tim had a capital loss of $200 when he sold another CGT asset, he deducts his capital loss ($200) from his capital gain ($900) and arrives at $700. As he applied the loss first against the capital gain calculated using the 'other' method and then against the capital gain calculated using the discount method (after grossing it up), Tim can apply the CGT discount to the remaining $700.

    End of example

    Losses from collectables and personal use assets

    You can only use capital losses from collectables this year and unapplied net capital losses from collectables from earlier years to reduce capital gains from collectables. Jewellery, art and antiques are examples of collectables.

    Losses from personal use assets are disregarded. Personal use assets are assets mainly used for personal use that are not collectables - such as a boat you use for recreation. For more information see the Guide to capital gains tax 2007.

    Last modified: 04 Mar 2016QC 19437