Capital gain or capital loss worksheet 2023

Example: Choose the indexation or discount method

Justin sold some land and has a $10,000 capital gain under the discount method (before applying the CGT discount) or a $7,000 capital gain under the indexation method. If Justin has no capital losses the discount method will produce the smaller capital gain (that is, $5,000).

However, Justin also made a capital loss of $5,000 on the sale of some shares. He will be better off using the indexation method to work out the capital gain from the sale of his land.

Under the indexation method his net capital gain is:

• $2,000 ($7,000 − $5,000).

If he used the discount method, his net capital gain would be:

• $2,500 [($10,000 − $5,000) × 50%].

Example: Capital gains on shares where you also have capital losses

Clare sold a parcel of 500 shares in March 2023 for $12,500; that is, for $25 each. She had acquired the shares in March 1995 for $7,500; that is, for $15 each, including stamp duty and brokerage costs. There were no brokerage costs on the sale of her shares. Clare had no other capital gains or capital losses in 2022–23, although she has $3,500 net capital losses carried forward from previous income years.

Because Clare owned the shares for more than 12 months, she can use the discount method or the indexation method to work out her capital gains – whichever gives her a better result. Clare decides to work out her net capital gain by applying both the discount method and the indexation method to the whole parcel of shares:

Note 1: $7,500 × (68.7 ÷ 63.8 = 1.077)

However, because each share is a separate asset, Clare can use different methods to work out her capital gains for shares within the parcel. The lowest net capital gain would result from her applying the indexation method to the sale of 395 (see note 2) shares and the discount method to the remaining 105. She works out her net capital gain as follows:

Indexation method (395 shares)

CGT discount method (105 shares)

Note 2: To calculate this, Clare worked out the capital gain made on each share using the indexation method ($4,423 ÷ 500 = 8.85) and divided the capital loss by this amount ($3,500 ÷ 8.85 = 395).

Example: Choosing the indexation or discount method

Val bought a property for $150,000 under a contract dated 24 June 1991. The contract provided for the payment of a deposit of $15,000 on that date, with the balance of $135,000 to be paid on settlement on 5 August 1991.

She paid stamp duty of $5,000 on 20 July 1991. On 5 August 1991, she received an account for solicitor’s fees of $2,000, which she paid as part of the settlement process.

She sold the property on 15 October 2022 (the day the contracts were exchanged) for $350,000. She incurred costs of $1,500 in solicitor’s fees and $4,000 in agent’s commission.

Val's capital gain calculated using the indexation method

Val works out her capital gain as follows:

(Val's total current year capital gain using this method)

Assuming Val has not made any other capital losses or capital gains in the 2022–23 income year and does not have any unapplied net capital losses from earlier years, her net capital gain using the indexation method is $161,787.

Val's capital gain calculated using the discount method

Val works out her capital gain as follows:

As the discount method provides Val with the better result, she will show the amount worked out using the discount method on her tax return rather than the amount worked out using the indexation method.

The completed worksheet example shows how Val might complete the Capital gain or capital loss worksheet using (PDF 143KB)This link will download a file both methods.

Example: Shares purchased and given away more than 12 months later

In May 1999, Andrew bought 1,200 units in Share Trust for $1,275. This amount included brokerage fees. He gave the units to his brother, in August 2021. A CGT event happens when Andrew makes the gift. At the time of this CGT event, the units were worth $1,595. As the market value of the units is greater than their cost base, Andrew has made a capital gain.

As Andrew bought the units before 21 September 1999 and he owned them for more than 12 months, he can use the indexation or discount method to calculate his capital gain, whichever gives him the better result.

Indexation method

If Andrew calculates his capital gain using the indexation method, he indexes the cost of his units and the incidental costs of buying them as follows:

The indexation factor is:

CPI for September 1999 quarter ÷ CPI for June 1999 quarter

68.7 ÷ 68.1 = 1.009

His indexed cost base is:

His cost ($1,275) × The indexation factor (1.009) = $1,286.48

So his capital gain is:

Discount method

If Andrew uses the discount method, his capital gain is calculated as:

Note 3: Andrew does not have any capital losses. If he did, he would deduct any capital losses before applying the discount.

Andrew chooses the discount method because it gives him a smaller capital gain.

Example: Using all three methods to calculate a capital gain

On 1 July 1994, Tony bought 10,000 shares in Kimbin Ltd for $2 each. He paid a stockbroker’s fee of $250 and stamp duty of $50.

On 1 July 2021, Kimbin Ltd offered each of its shareholders one right for each four shares owned to acquire shares in the company for $1.80 each. The market value of the shares at the time was $2.50.

On 1 August 2021, Tony exercised all rights and paid $1.80 per share.

On 1 December 2021, Tony sold all his shares in Kimbin Ltd for $3.00 each. He incurred a stockbroker’s fee of $500 and stamp duty of $50.

Note: Separate records

Tony has two parcels of shares – those he acquired on 1 July 1994 and those he acquired at the time he exercised all rights, 1 August 2021. He needs to keep separate records for each parcel and apportion the stockbroker’s fee of $500 and stamp duty of $50.

The completed Capital gain or capital loss worksheet (PDF, 143KB)This link will download a file shows how Tony can evaluate which method gives him the best result.

He uses the 'other' method for the 2,500 shares he owned for less than 12 months, as he has no choice:

For the 10,000 shares he has owned for 12 months or more, his capital gain using the indexation method would be:

This means his net capital gain would be:

'other' method + indexation method = net capital gain

$2,890 + $6,743 = $9,633

If Tony uses the discount method instead (assuming he has no capital losses), his capital gain would be:

He applies the CGT discount of 50%:

$9,260 × 50% = $4,630

This means Tony’s net capital gain would be:

'other' method + discount method = net capital gain

$2,890 + $4,630 = $7,520

In this case, Tony would choose the discount method, rather than the indexation method, as it gives him the better result – that is, a lower net capital gain.