Capital loss v profit, page-7

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optionsjnr

918 Posts.

11/01/21

10:58

Post #: 50078792
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Originally posted by bellenuit ↑

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

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I didn't discount the 1k even though it was able to be discounted.
I do remember reading on the ATO site that it's best to not discount when you have accumulated capital losses.
And yes when and if I get closer to eliminating the losses then I can look at discounting if held longer than 12 months.
Thank you for your input, much appreciated and a good reference to look back on.
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0 Great analysis

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