Capital Gains on Shares

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stevo1234

(Initiate)Initiate

20 Feb 2024

Hi, I have question with regards to CGT on Shares. Example

* Held over 12months

* Total Purchase $2.0m

* Total Sale = $2.4m

- Question - is a loss carried forward from prior year eg $150k taken off the $400k profit before the 50% discount is applied.

$400k - $150k loss = $250k gain

- 50% discount. = $125k

Individual tax rate 37% = $46,250 in tax payable?

OR is it

$400k net gain

- 50% discount (held over 12months) = $200k

- $150k loss carried forward = $50k gain

$50k @ 37% individual tax rate = $18,500

Quite a difference that I cant seem to confirm online anywhere even ATO

Many thanks

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knaresbro

(Devotee)Devotee

20 Feb 2024

See this ATO page @stevo1234 which says losses before discount, and also this ATO page covering in which order losses should be applied to gains.

Current and prior year losses must be deducted from the current year gain as a first step. And you must use losses at the first opportunity. If the net gain has been reduced to zero and you still have losses remaining, they're carried forward. If the net gain is positive, you can then apply the 50% discount provided the assets involved were held for long enough.