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:
Work out how much you have received from each CGT event (the capital proceeds) |
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Work out how much each CGT asset cost you (the cost base), and |
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Subtract the cost base (step 2) from the capital proceeds (step 1). |
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. The three ways of calculating your capital gain are described in step 3 of part A.
If you received less from the CGT event than the asset cost you (that is, the capital proceeds are less than the cost base), you then need to work out the asset's reduced cost base to see if you have made a capital loss. Generally, for shares the cost base and reduced cost base are the same. However, they will be different if you choose the indexation method, because the reduced cost base cannot be indexed.
If the reduced cost base is greater than the capital proceeds, the difference is a 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 show you the calculations required to work out your CGT obligation using the 'other' and discount methods. If you want to use the indexation method (by indexing your cost base for inflation), you do this at Step 2 Work out the cost base of your asset. You may find it easier to follow the worked examples in chapter B2.
You may find it useful to use notepaper to do your calculations while you work through the following steps so you can transfer the relevant amounts to item 17 on your tax return (supplementary section), or item 9 if you use the tax return for retirees. (Note: You cannot use Tax return for retirees 2006 if you had a distribution from a managed fund during the year.)