Capital Gains Tax, page-19

I am not an accountant, but I do my own tax returns. The general consensus on CGT here is too simplistic.

If you are a trader you make many trades with CGT losses and gains. Half only works after all losses have been used to offset gains. The gains are not halved until all of the losses are applied.

So, imagine the following situations (and assuming you don't have any previous year capital losses to apply):

1. You make two trades in the financial year, one gains $1k (over more than 1 year) the other loses $1k.
2. You make two trades in the financial year, one gains $1k (over less than 1 year) the other loses $1k.
3. You make two trades in the financial year, one gains $3k (over more than 1 year) the other loses $1k.
4. You make two trades in the financial year, one gains $3k (over less than 1 year) the other loses $1k.
5. You make three trades in the financial year, one gains $1k (over more than 1 year), one gains $1k over less than 1 year and the other loses $1k.

In all of the above it doesn't matter for a capital loss how long it took to make the capital loss. The outcome of the above is:

1. You made $0 and received $0 in taxable income.
2. You made $0 and received $0 in taxable income.
3. You made $2k and received $1k in taxable income.
4. You made $2k and received $2k in taxable income.
5. You made $1k and received $0.5k in taxable income (you applied the loss to the non halved gain and kept the halved gain for CGT).

From 1&2 you can see that discount gains are identical to non-discount for the application of capital losses.
From 3 you see that it is not (3 / 2) - 1 = $0.5k. It is (3 - 1) / 2 = $1k for taxable income.

It is the leftover gains after losses have been applied that are halved.

Let me know if I'm wrong, I am not an accountant. See your own financial advice, these are just my wild guesses.