Australian (ASX) Stock Market Forum

How to apply capital gains tax discount (1 Viewer)

Joined
May 3, 2008
Posts
2,001
Reactions
311
After reading the document again I agree with you. In fact, example 16 at the back is the most relevant and there's no mis-interpretation that discount is applied after offseting the loss.

Short term gains for a trader are income rather than in the capital account... so there's usually not a lot of short term capital gains to offset the loss.

That's a bit of a pain then - balancing up the losses against non-discountable gains is the legit minimisation route. Any scope for segregating business and private to generate some non-discountable gains on a capital account? Perhaps too messy to be worth it.
 
Joined
Nov 22, 2010
Posts
3,661
Reactions
8
That's a bit of a pain then - balancing up the losses against non-discountable gains is the legit minimisation route. Any scope for segregating business and private to generate some non-discountable gains on a capital account? Perhaps too messy to be worth it.

The ATO is suitably vague about who is a trader and who is an investor!
 

skc

Goldmember
Joined
Aug 12, 2008
Posts
8,277
Reactions
317
That's a bit of a pain then - balancing up the losses against non-discountable gains is the legit minimisation route. Any scope for segregating business and private to generate some non-discountable gains on a capital account? Perhaps too messy to be worth it.

It's not that much of a pain as I don't really have much capital loss. Most of my loss are trading losses and just the cost of doing business. It's a bit hard to argue I am not a trader when clearly I am. For "investments" I always make a separate note on why I am investing... hopefully that'd suffice in an audit.

BTW I usually just hand the gains and losses to my accountant who deals with the tax return... it's just cross my mind the other day wondering the method to which they calculate the tax...

So thanks everyone for the discussion (and saving me some fees from my accountant). :)
 
Joined
May 3, 2008
Posts
2,001
Reactions
311
It's not that much of a pain as I don't really have much capital loss. Most of my loss are trading losses and just the cost of doing business. It's a bit hard to argue I am not a trader when clearly I am. For "investments" I always make a separate note on why I am investing... hopefully that'd suffice in an audit.

BTW I usually just hand the gains and losses to my accountant who deals with the tax return... it's just cross my mind the other day wondering the method to which they calculate the tax...

So thanks everyone for the discussion (and saving me some fees from my accountant). :)

Knowing the way it’s calculated, A few suitably documented investments and some also suitable documented (strategic) short term changing of the mind and you can hand the accountant exactly what’s needed to avoid wasting the discount. Nothing to see here - lifes good;)
 
Joined
Jan 23, 2012
Posts
14
Reactions
0
Capital Gains Tax is not easy to maintain when you have to deal with mutiple trades and distributions, long term gains, short term gains and losses plus distributions with CGT components including tax free and tax deferred. Are you doing it correctly. Plus if you not sure what to do then use a software that does it for you. I use www.unip.com.au and I am happy with it. You wont be disappointed.
 
Joined
Nov 22, 2010
Posts
3,661
Reactions
8
Capital Gains Tax is not easy to maintain when you have to deal with mutiple trades and distributions, long term gains, short term gains and losses plus distributions with CGT components including tax free and tax deferred. Are you doing it correctly. Plus if you not sure what to do then use a software that does it for you. I use www.unip.com.au and I am happy with it. You wont be disappointed.

I'm told it's not rocket science, but Capital Gains Tax does have nuances!



I try to keep mine simple! :cool:
 
Joined
Feb 14, 2005
Posts
11,946
Reactions
7,963
So if I have understood this correctly, then (keeping the figures small to make this simple):

Suppose that I had a loss of $1000 carried over from the previous year.

In the current financial year I then sell two parcels of shares, both of which have been held for more than 12 months. One results in a profit of $200, the other results in a profit of $900.

However, since losses must be applied prior to applying any CGT discount, the end result is (1000 - 200 - 900) = a $100 profit to which the 50% GCT discount can then be applied.

I've kept the figures simple, but have I understood the principle correctly here?
 
Joined
Jun 8, 2008
Posts
6,996
Reactions
7,212
So if I have understood this correctly, then (keeping the figures small to make this simple):

Suppose that I had a loss of $1000 carried over from the previous year.

In the current financial year I then sell two parcels of shares, both of which have been held for more than 12 months. One results in a profit of $200, the other results in a profit of $900.

However, since losses must be applied prior to applying any CGT discount, the end result is (1000 - 200 - 900) = a $100 profit to which the 50% GCT discount can then be applied.

I've kept the figures simple, but have I understood the principle correctly here?
that is indeed my understanding and the way I handle it in my tax return but I am not a professional in this matter
 
Joined
Nov 22, 2010
Posts
3,661
Reactions
8
So if I have understood this correctly, then (keeping the figures small to make this simple):

Suppose that I had a loss of $1000 carried over from the previous year.

In the current financial year I then sell two parcels of shares, both of which have been held for more than 12 months. One results in a profit of $200, the other results in a profit of $900.

However, since losses must be applied prior to applying any CGT discount, the end result is (1000 - 200 - 900) = a $100 profit to which the 50% GCT discount can then be applied.

I've kept the figures simple, but have I understood the principle correctly here?

Tax Office website shows several examples.

Only one example clearly shows this to be the case.
 

Users who are viewing this thread

Top