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Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS

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Division 102 - Assessable income includes net capital gain

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Operative provisions

SECTION 102-5 Assessable income includes net capital gain

102-5(1)

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Your assessable income includes your net capital gain (if any) for the income year. You work out your net capital gain in this way: Working out your net capital gain

Step 1.

Reduce the *capital gains you made during the income year by the *capital losses (if any) you made during the income year.

Note 1:

You choose the order in which you reduce your capital gains. You have a net capital loss for the income year if your capital losses exceed your capital gains: see section 102-10 .

Note 2:

Some provisions of this Act (such as Divisions 104 and 118 ) permit or require you to disregard certain capital gains or losses when working out your net capital gain. Subdivision 152-B permits you, in some circumstances, to disregard a capital gain on an asset you held for at least 15 years.

Step 2.

Apply any previously unapplied *net capital losses from earlier income years to reduce the amounts (if any) remaining after the reduction of *capital gains under step 1 (including any capital gains not reduced under that step because the *capital losses were less than the total of your capital gains).

Note 1:

Section 102-15 explains how to apply net capital losses.

Note 2:

You choose the order in which you reduce the amounts.

Step 3.

Reduce by the *discount percentage each amount of a *discount capital gain remaining after step 2 (if any).

Note:

Only some entities can have discount capital gains, and only if they have capital gains from CGT assets acquired at least a year before making the gains. See Division 115 .

Step 4.

If any of your *capital gains (whether or not they are *discount capital gains) qualify for any of the small business concessions in Subdivisions 152-C , 152-D and 152-E , apply those concessions to each capital gain as provided for in those Subdivisions.

Note 1:

The basic conditions for getting these concessions are in Subdivision 152-A .

Note 2:

Subdivision 152-C does not apply to CGT events J2, J5 and J6. In addition, Subdivision 152-E does not apply to CGT events J5 and J6.

Step 5.

Add up the amounts of *capital gains (if any) remaining after step 4. The sum is your net capital gain for the income year.

Note:

For exceptions and modifications to these rules: see section 102-30 .

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102-5(2)
However, if during the income year:

(a) you became bankrupt; or

(b) you were released from debts under a law relating to bankruptcy;

any *net capital loss you made for an earlier income year must be disregarded in working out whether you made a *net capital gain for the income year or a later one.

102-5(3)
Subsection (2) applies even though your bankruptcy is annulled if:

(a) the annulment happens under section 74 of the Bankruptcy Act 1966 ; and

(b) under the composition or scheme of arrangement concerned, you were, will be or may be released from debts from which you would have been released if instead you had been discharged from the bankruptcy.

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