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  • The 'other' method

    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

    If you have bought and sold your asset within 12 months, you must use the 'other' method to calculate your capital gain as neither the indexation nor discount methods apply. This is the simplest of the three methods.

    Generally, to use the 'other' method, you simply subtract your cost base (what the asset cost) from your capital proceeds (how much you sold it for). The amount left is your capital gain. For some types of CGT event, a cost base is not relevant. In these cases, the particular CGT event explains the amounts to use.

    If your asset cost you more than you sold it for, you may have made a capital loss and may have a reduced cost base (see How to calculate a capital loss).

    Example
    Calculating a capital gain using the 'other' method

    Marie-Anne bought a property for $150 000 under a contract dated 24 June 2000. The contract provided for the payment of a deposit of $15 000 on that date, with the balance of $135 000 to be paid on settlement on 5 August 2000.

    Marie-Anne paid stamp duty of $5000 on 20 July 2000. On 5 August 2000, she received an account for solicitors fees of $2000, which she paid as part of the settlement process.

    She sold the property on 15 October 2000, the day the contracts were exchanged, for $215 000. Marie-Anne incurred costs of $1500 in solicitors fees and $4000 in real estate fees.

    As she bought and sold her property within 12 months, Marie-Anne used the 'other' method to calculate her capital gain.

     

    $

    Deposit

    15 000

    Balance

    135 000

    Stamp duty

    5 000

    Solicitors fees

    2 000

    Solicitors feesfor sale of property

    1 500

    Real estate fees

      4 000

    Cost base (total)

    162 500

    Marie-Anne works out her capital gain as follows:

    Capital proceeds

    215 000

    Less cost base

    162 500

    Capital gain using 'other' method

    52 500

    Assuming Marie-Anne has not made any other capital losses or capital gains in the 2000-01 year and does not have any prior year net capital losses, the net capital gain to be included in item 17 in her tax return is $52 500.

    Last modified: 31 Aug 2010QC 16195