This a repost from codebear (whirlpool) last year with no response - Can anyone confirm the application? Thanks
In case anyone else comes across this thread, one thing which is not addressed above is the order in which capital losses may be applied. According to the Personal investors guide to capital gains tax 2013-14:
You will probably get the greatest benefit if you deduct capital losses from capital gains in the following order:
1 capital gains for which neither the indexation method nor the discount method applies (that is, if you bought and sold your shares within 12 months)
2 capital gains calculated using the indexation method, and then
3 capital gains to which the CGT discount can apply.
From this I take it that you get to choose how to distribute a previous capital loss against capital gains for different equities sold.
So if we take the OP's scenario and modify it slightly, suppose you have a $1000 in total capital gains of which $500 is eligible for 50% CGT discount, but have $600 of capital losses from previous tax years; then you can do this:
1. Shares not eligible for CGT discount
Capital gain: $500
Less capital losses: ($500)
Net capital gain: $0
2. Shares eligible for CGT discount
Capital gain: $500
Less capital losses: ($100)
Remaining eligible for CGT discount: ($400)
Less 50% CGT discount: ($200)
Net capital gain: $200
Adding the corresponding bolded numbers together, there would be $1000 total current year capital gains but only $200 net capital gain. At least, that's my understanding (I am not an accountant). Note that if you were to apply the loss in the other order, you would have a net capital gain of $400 (which is worse).
