ato

 
 
Show download pdf controls
Show print controls

  • How to calculate a capital loss

    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

    Generally, you make a capital loss if your reduced cost base is greater than your capital proceeds. The excess is your capital loss.

    Example

    Antonio acquired a new income-producing asset on 28 September 1999 for $100,000, including stamp duty and legal costs. He sold it for $90,000 in November 2005. During the period he owned it, he was allowed capital works deductions of $7,500. Antonio works out his capital loss as follows.

    Cost base

    $100,000

    less capital works deductions

    $7,500

    Reduced cost base

    $92,500

    less capital proceeds

    $90,000

    Capital loss

    $2,500

     

    End of example

     

    Example

    In July 1996, Chandra bought 800 shares at $3 per share. He incurred brokerage and stamp duty of $100. In December 2005, Chandra sold all 800 shares for $2.50 per share. He incurred brokerage of $75. He made a capital loss, calculated as follows.

    Calculation of reduced cost base

    Date expense incurred

    Description of expense

    Expense

    July 1996

    Purchase price

    $2,400

    July 1996

    Brokers fees and stamp duty

    $100

    December 2005

    Brokers fees

    $75

    Reduced cost base

    -

    $2,575
    Calculation of capital loss

    Reduced cost base

    $2,575

    Capital proceeds 800 × $2.50

    $2,000

    Capital loss

    $575

    However, the reduced cost base is not relevant for some types of CGT events. In these cases, the particular CGT event explains the amounts to use (see appendix 1).

    Reduced cost base

    You cannot index a reduced cost base.

    End of example
    Last modified: 21 Apr 2020QC 18504