Step 4 - Work out whether you may claim the CGT discount



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The CGT discount allows individuals (including partners in partnerships) and trusts to reduce their capital gain by 50%. Superannuation funds can reduce their gain by 33.33%. There are more rules for beneficiaries who are entitled to a share of a trust capital gain. Companies are not eligible for the CGT discount.

The discount is not limited to small business capital gains, but can also be applied to personal capital gains.

Capital gains and depreciating assets

You make a capital gain from a depreciating asset only to the extent you have used the depreciating asset for a non-taxable purpose (for example, for private purposes). Such a gain may be eligible for the CGT discount.

Are you eligible?

To be eligible for the CGT discount you must meet both of the following:

  • be an individual, trust or complying superannuation fund
  • have owned the asset involved for at least 12 months.

Certain CGT events, such as where new assets are created, do not qualify for the CGT discount because the 12-month rule would not be satisfied.

If you are eligible for the CGT discount, reduce the capital gain by 50% (or 33.33% for complying superannuation funds).

Example: CGT discount

After offsetting her $3,000 capital losses against her $17,000 capital gain, Lana is left with a capital gain of $14,000. As she is eligible for the CGT discount, she can reduce the remaining capital gain by 50%, as follows:

$14,000 - (50% x $14,000) = $7,000

Lana may be able to reduce her capital gain further using one or more of the other small business CGT concessions.

Last modified: 28 Jun 2012QC 25843