Hi everyone,
Could I please confirm my understanding of my CGT calculations for shares. I’ve used round numbers for simplicity. My tracking software gave me summary numbers which I used with carried forward capital losses from prior years, then the long term discount.
Scenario:
Short-term capital gains: $2,000
Short-term capital losses: $1,000
→ Net short-term gain: $1,000
Long-term capital gains: $2,200
Long-term capital losses: $0
→ Net long-term gain: $2,200
I have carried forward capital losses from prior years: $3,000
What I did:
I offset my carried forward losses against the short-term gain first $1,000 (3,000 − 1,000 = 2,000 remaining), then the long-term gain (2,200 − 2,000 = 200 of capital gain).
I followed “You can choose which capital gains to subtract your losses from. If you have any capital gains that are not eligible for the CGT discount, subtract your losses from these gains first. This gives you the best result (the lowest CGT).”
Source: https://smallbusiness.taxsuperandyou.gov.au/capital-gains-tax/the-discount-method
That $200 of long-term gain, I applied the 50% CGT discount to, giving a $100 taxable capital gain at the end.
Does this sequence line up with ATO’s rule that losses must be applied before the CGT discount?
Thank you for any help, have a great day.
Bill
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