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. See appendix 1 for the amounts to use.
Example 9: Calculating a capital gain using the 'other' method
Marie-Anne bought a property for $250,000 under a contract dated 23 June 2010. The contract provided for the payment of a deposit of $25,000 on that date, with the balance of $225,000 to be paid on settlement on 4 August 2010.
Marie-Anne paid stamp duty of $5,000 on 20 July 2010. On 4 August 2010, 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 2010 (the day the 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 |
Solicitors fees for purchase of property |
$2,000 |
Solicitors fees for sale of property |
$1,500 |
Agents 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 has not made any other capital losses or capital gains in the 2010–11 income year, and does not have any unapplied net capital losses from earlier years, the net capital gain to be included at item 18 on her Tax return for individuals (supplementary section) 2011 (NAT 2679) is $52,500.
End of example