• The discount method

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

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    The discount method is one of the ways to calculate your capital gain if: you are an individual, a trust or a complying superannuation fund

    • a CGT event happens in relation to an asset you own
    • the CGT event happened after 11.45am on 21 September 1999
    • you acquired the asset at least 12 months before the CGT event, and
    • you did not choose to use the indexation method.

    In certain circumstances, you may be eligible for the CGT discount even if you have not owned the asset for at least 12 months. For example, you can use the discount method:

    • if you acquire a CGT asset as a legal personal representative or as a beneficiary of a deceased estate. The 12-month requirement is satisfied if the asset was acquired by the deceased:
      • before 20 September 1985, and you disposed of it 12 months (or more) after they died, or
      • on or after 20 September 1985 and you disposed of it 12 months or more after they acquired it
       
    • if you acquired an asset as a result of a marriage breakdown, you will satisfy the 12-month requirement if the period your spouse owned the asset and the period you have owned the asset are in total equal to, or greater than, 12 months, or
    • if a CGT asset is compulsorily acquired, lost or destroyed and you acquire a roll-over replacement asset, you will satisfy the 12-month requirement for the replacement asset if the period of ownership of the original asset and the replacement asset is at least 12 months.

    Certain capital gains are excluded

    There are certain CGT events to which the CGT discount cannot be applied.

    For example, if you make a capital gain from a CGT event that creates a new asset, for example, receiving a payment for agreeing not to do something (entering into a restrictive covenant), you cannot satisfy the 12-month ownership rule so your CGT event does not qualify for the CGT discount.

    Another example is if you bought an asset and, within 12 months, you agreed to sell it to someone where the sale would occur after you had owned the asset for more than 12 months. Any capital gain resulting from this would not qualify for the CGT discount.

    The full list of CGT events from A1 to K6 is shown in the summary at appendix 3. The CGT discount does not apply to CGT events D1, D2, D3, E9, F1, F2, F5, H2, J2, J3 or K1.

    Discount percentage

    The discount percentage is the percentage by which you reduce your capital gain. You can reduce the capital gain only after you have applied all available capital losses.

    The discount percentage is 50% for individuals and trusts, and 33.3% for complying superannuation funds.

    Last modified: 31 Aug 2010QC 16195