• Step 7-Applying the CGT discount

    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

    You can now reduce any remaining current year capital gains calculated using the discount method by the discount percentage (50 per cent for individuals). You cannot apply the discount to capital gains calculated using the indexation method or the 'other' method.

    Example

    Total capital gains calculated using the discount method

    From our earlier example, we know Kathleen had capital gains of $2,520 calculated using the discount method after applying relevant capital losses. She works out her total capital gains calculated using the discount method by multiplying her capital gain by the CGT discount of 50 per cent:

    $2,520 X 50% = $1,260

    Note-Small business concessions

    If you are a small business owner, you may qualify for one or more of the CGT small business concessions. These include the 50 per cent active asset reduction, small business roll-over relief and the small business retirement exemption. You can apply these concessions now to the amount after step 7 to arrive at your amount at A. You may apply the concessions to both capital gains calculated using the discount method and the 'other' method.

    If both the CGT discount and the small business 50 per cent active asset reduction apply, the capital gain (after being reduced by any capital losses to be applied) is effectively reduced by 75 per cent in total.

    For more information, view the publication Capital gains tax concessions for small business

    Last modified: 06 Oct 2009QC 27417