50% CGT discount calculation

 Author: dove23(Initiate)Initiate

30 Jan 2024

Hi ATO community,

Question on CGT when you owned an asset for at least 12 months and 50% CGT discount applies.

(https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/cgt-discount)

Say we have

• Asset Acquire/Purchase Price: 300k
• Asset Dispose/Sale Price: 500k
• Expenses while acquiring, holding and selling the asset: 100k

How is the final capital gain amount after 50% discount and expenses calculated?

I have two possible calculations below.

• A: apply discount after expenses are deducted
• B: apply discount first and then deduct the expenses

Calculation A: (Sale Price – Purchase Price – Expenses) x 0.5

= (500k – 300k – 100k) x 0.5

= (100k) x 0.5

= 50k

Calculation B: (Sale Price – Purchase Price) x 0.5 – Expenses

= (500k – 300k) x 0.5 – 100k

= (200k) x 0.5 – 100k

= 0

What is the correct formula to calculate the final capital gain amount that I will be taxed on, A or B?

Thanks

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