Example 14: Calculating a capital loss
Antonio acquired a new income-producing asset on 28 September 1999 for $100,000, including stamp duty and legal costs. He sold it for $90,000 in November 2019. During the period he owned it, he was allowed capital works deductions of $7,500. Antonio works out his capital loss as follows:
Cost base |
$100,000 |
less capital works deductions |
$7,500 |
Reduced cost base |
$92,500 |
less capital proceeds |
$90,000 |
Capital loss |
$2,500 |
End of example
Example 15: Calculating a capital loss
In July 1996, Chandra bought 800 shares at $3 per share. He incurred brokerage and stamp duty of $100. In December 2019, Chandra sold all 800 shares for $2.50 per share. He incurred brokerage of $75. He made a capital loss, calculated as follows:
Calculation of reduced cost base
July 1996 |
Purchase price |
$2,400 |
July 1996 |
Brokerage and stamp duty |
$100 |
December 2018 |
Brokerage |
$75 |
Reduced cost base |
|
$2,575 |
Calculation of capital loss
Reduced cost base |
$2,575 |
Capital proceeds (800 × $2.50) |
$2,000 |
Capital loss |
$575 |
End of example
However, the reduced cost base is not relevant for some types of CGT events. In these cases, see appendix 1 for the amounts to use for the particular CGT event.
Reduced cost base
You cannot index a reduced cost base.