If you did not make a capital gain, you need to calculate a reduced cost base of your asset before you can work out any capital loss.
The reduced cost base is the cost base less any amounts you need to exclude from it. Interest on borrowings and indexation are examples of amounts you exclude.
Example 4: Reduced cost base
In our example, Fred had no amounts to exclude so the cost base and the reduced cost base for his shares are the same ($5,125).End of example
For units, you may need to make adjustments to the cost base and reduced cost base depending on the types of amounts distributed. Your fund should advise you of these amounts in its statements:
- tax-deferred amount - this reduces the cost base and the reduced cost base
- CGT-concession amount - if received before 1 July 2001, this reduces the cost base and reduced cost base (if received on or after 1 July 2001, it does not affect your cost base or your reduced cost base)
- tax-free amount - this reduces your reduced cost base only
- tax-exempted amount - this does not affect your cost base and reduced cost base.