• Using the capital gain or capital loss worksheet for shares

    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

    In example 46 below, Tony uses the indexation method, the discount method and the 'other' method to calculate his capital gain so he can decide which method gives him the best result. This example shows you how to complete the Capital gain or capital loss worksheet (PDF, 198KB) to calculate your capital gain when you acquire or dispose of shares.

    See How to work out your capital gain or capital loss for a description of each method and when you can use each one.

    Remember that if you bought and sold your shares within 12 months, you must use the 'other' method to calculate your capital gain. If you owned your shares for 12 months or more, you may be able to use either the discount method or the indexation method, whichever gives you the better result.

    Because each share in a parcel of shares is a separate CGT asset, you can use different methods to work out the amount of any capital gain for shares within a parcel. This may be to your advantage if you have capital losses to apply. See example 12.

    Example 46: Using all three methods to calculate a capital gain

    On 1 July 1993, Tony bought 10,000 shares in Kimbin Ltd for $2 each. He paid brokerage of $250 and stamp duty of $50.

    On 1 July 2007, Kimbin Ltd offered each of its shareholders one right for each four shares owned to acquire shares in the company for $1.80 each. The market value of the shares at the time was $2.50. On 1 August 2007, Tony exercised all rights and paid $1.80 per share.

    On 1 December 2007, Tony sold all his shares in Kimbin Ltd for $3.00 each. He incurred brokerage of $500 and stamp duty of $50.

    Separate records

    Tony has two parcels of shares, those he acquired on 1 July 1993 and those he acquired at the time he exercised all rights, 1 August 2007. He needs to keep separate records for each parcel and apportion the sale brokerage of $500 and stamp duty of $50.

    The completed Capital gain or capital loss worksheets (PDF, 111KB) show how Tony can evaluate which method gives him the best result.

    He uses the 'other' method for the 2,500 shares he owned for less than 12 months, as he has no choice:

    $7,500
    capital proceeds

    $4,610
    cost base

    =

    $2,890
    capital gain

     

    For the 10,000 shares he has owned for 12 months or more, his capital gain using the indexation method would be:

    $30,000
    capital proceeds

    $23,257
    cost base

    =

    $6,743
    capital gain

     

    This means his net capital gain would be:

    $2,890
    'other' method

    +

    $6,743
    indexation method

    =

    $9,633
    net capital gain

     

    If Tony uses the discount method instead (assuming he has no capital losses), his capital gain would be:

    $30,000

    $20,740

    =

    $9,260

     

    He applies the CGT discount of 50%:

    $9,260 × 50% = $4,630

    This means his net capital gain would be:

    $2,890
    'other' method

    +

    $4,630
    discount method

    =

    $7,520
    net capital gain

     

    In this case, he would choose the discount method rather than the indexation method, as it gives him the better result (a lower net capital gain).

    End of example
    Dividend paid by a listed investment company (LIC) that includes LIC capital gain

    If a LIC pays a dividend to you that includes a LIC capital gain amount, you may be entitled to an income tax deduction.

    You can claim a deduction if:

    • you are an individual
    • you were an Australian resident when a LIC paid you a dividend, and
    • the dividend included a LIC capital gain amount.

    The amount of the deduction is 50% of the LIC capital gain amount. The LIC capital gain amount will be shown separately on your dividend statement.

    You do not show the LIC capital gain amount at item 18 on your tax return (supplementary section).

    Example 47: LIC capital gain

    Ben, an Australian resident, was a shareholder in XYZ Ltd, a LIC. For the 2012–13 income year, Ben received a fully franked dividend from XYZ Ltd of $70,000 including a LIC capital gain amount of $50,000. Ben includes on his tax return the following amounts:

    Franked dividend (written at T item 11 in his tax return)

    $70,000

    plus franking credit (written at U item 11 in his tax return)

    $30,000

     

    $100,000

    less 50% deduction for LIC capital gain (written as deduction at item D8 on his tax return)

    $25,000

    Net amount included in taxable income

    $75,000

     

    End of example
      Last modified: 04 Jul 2013QC 28207