It is important to note that if the $1k gain this year is a...

  1. 997 Posts.
    lightbulb Created with Sketch. 83
    It is important to note that if the $1k gain this year is a discountable gain (shares held for more than 12 months), you apply the $5k carried forward loss against the gross undiscounted amount to work out the new carried forward loss.

    Examples:

    $5K CF loss and $1K discountable gain this year: Net Capital Gain for Tax is $0 and CF Loss to next year is $4K

    $5K CF Loss and $7K discountable gain this year: Net Capital Gain is $1K and CF loss to next year is $0.

    In other words, the CF Losses (and any Current Year Losses) are applied against the gross undiscounted gains for this year before applying the 50% discount.

    That is why you should always apply losses first against this years non-discountable capital gains, then against this years gross discountable gains, and then anything left over is discounted 50%. That will always work best for you and is what the ATO suggest you do.

    In the 2nd example, is this years gains were $5K non-discountable and $2k discountable, then if you apply against the non-discountable first, you will have $0 non-discountable (after $5k losses applied) and $2k discountable left over, meaning your net capital gain after discount is $1k.

    But if you applied against the discountable first (wipes it out) and the remaining $3k against the non-discountable, you would have $2k non-discountable left over, so your net capital gain is $2k
    Last edited by bellenuit: 10/01/21
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.