• The 'other' method of calculating your capital gain

    The ‘other’ method is the simplest of the three methods for calculating a capital gain. You must use this method to calculate your capital gain if you have bought and sold your asset within 12 months or, generally, for capital gains tax (CGT) events that do not involve an asset.

    Generally, to use the 'other' method, you simply subtract your cost base from your capital proceeds. The amount of proceeds left is your capital gain.

    Example: Property purchased and sold within 12 months

    Marie-Anne bought a property for $250,000 under a contract dated 24 June 2016. The contract provided for payment of a deposit of $25,000 on that date, with the balance of $225,000 to be paid on settlement on 4 August 2016.

    Marie-Anne paid stamp duty of $5,000 on 20 July 2016. On 4 August 2016, she received an account for solicitor’s fees of $2,000, which she paid as part of the settlement process.

    Marie-Anne sold the property on 16 October 2016 (the day contracts were exchanged) for $315,000. She incurred costs of $1,500 in solicitor’s fees and $4,000 in agent’s commission.

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

    Deposit

    $25,000

    Balance

    $225,000

    Stamp duty

    $5,000

    Solicitor’s fees for purchase of property

    $2,000

    Solicitor’s fees for sale of property

    $1,500

    Agent’s commission

    $4,000

    Cost base (total)

    $262,500

    Marie-Anne works out her capital gain as follows:

    Capital proceeds

    $315,000

    less cost base

    $262,500

    Capital gain calculated using the ‘other’ method

    $52,500

    Assuming Marie-Anne hasn't made any other capital losses or capital gains in the 2016–17 income year, and doesn't have any unapplied net capital losses from earlier years, the net capital gain to be included on her tax return is $52,500.

    End of example

    Next steps:

    • You can use the Capital gain or capital loss worksheet to work out and compare your outcomes when using the discount and indexation methods, and to work out your capital gain or loss using the 'other' method.

    See also:

    Last modified: 17 Jul 2017QC 17164