Step 7 Applying the CGT discount



This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

The discount percentage of 50% for individuals can only be applied to those capital gains calculated using the discount method. If you have used the indexation method or the 'other' method, you cannot apply the discount to those capital gains.

If you had any capital losses, these should have been taken off your capital gains in step 5 or step 6. If there is any remaining current year capital gain for which you used the discount method, you can now reduce this by 50% to arrive at your total discount method capital gains.

Total discount method capital gains

From our earlier example, we know Kathleen had discount method capital gains of $2520 after applying relevant capital losses. She works out her total discount method capital gains by multiplying her gain by the CGT discount of 50%:

$2520 x 50% = $1260

Small business concessions

If you are a small business, you may qualify for one or more of the CGT small business concessions. These include the 50% 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 label A amount. You may apply the concessions to both discount method capital gains and 'other' method capital gains.

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

For more information, obtain a copy of the publication Capital gains tax concessions for small business.

Last modified: 31 Aug 2010QC 16195