• ### How to calculate a capital loss

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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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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

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 x \$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.