Capital Gains Discount Stacked with Carried over Capital Loss

LemonShapedRock on 21/12/2020 - 17:21

Hi all,

I'll use round numbers for simplicities sake;

I have a capital gain of $1,000 which I've held for more than 12 months and is eligible for the 50% capital gains discount.

I also have a capital loss from last financial year for $2,000.

Would the capital loss of $2,000 be reduced by the full $1,000 or only 50% which would be $500?

I imagine it would be the full $1,000 but not 100% on the wording of the two rules.

Thanks

Comments

shrek4 on 21/12/2020 - 17:46

+2

My understanding is it would be the full $1000.
Keplaffintech on 21/12/2020 - 17:59

+3

. You can reduce the capital gain only after you have applied all the capital losses for the income year and any unapplied net capital losses from earlier years.

https://www.ato.gov.au/general/capital-gains-tax/working-out…
Seraphin7 on 21/12/2020 - 18:46

+1

The carry forward capital loss will reduce by $1,000.

Strictly speaking, it's a 50% discount on the tax payable, not on the capital gain incurred.
- CheapskateQueen on 21/12/2020 - 21:29
  
  actually, it's 50% of the capital gain
- peterpeterpumpkin on 21/12/2020 - 21:39
  
  +1
  
  With regards to net capital gains, although subtracting the carried forward capital losses (in addition to the asset's cost base) before applying the relevant discount "makes sense", the blanket formula "A - B - C" is so confusing for the common "50% off discounts" from an elementary mathematical perspective. I think ATO documentation should be audited by an unbiased external agency and in depth examples should be made compulsory. I'm also not a fan of taxation rulings.
LemonShapedRock on 21/12/2020 - 18:52

Thanks everyone, appreciate the input.
Donaldhump on 21/12/2020 - 21:36

I always thought it would reduce by 500,but confirming is it the full 1000?