Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_1:p4
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 4/9)
Character Range: 12978–15496

amounts from the CGT event which exceed your total costs associated with that event.

 • You make a capital loss if your total costs associated with the CGT event exceed the capital amounts you receive (or are entitled to receive) from the event.

100‑40  What factors come into calculating a capital gain or loss?

Capital proceeds

 (1) For most CGT events, the capital amounts you receive (or are entitled to receive) from the event are called the capital proceeds.

To work out the capital proceeds: see Division 116.

Cost base and reduced cost base

 (2) For most CGT events, your total costs associated with the event are worked out in 2 different ways:

 • For the purpose of working out a capital gain, those costs are called the cost base of the CGT asset.

 • For the purpose of working out a capital loss, those costs are called the reduced cost base of the asset.

  One of the main differences is that the costs are indexed for inflation in working out a capital gain (which reduces the size of the gain), but not in working out a capital loss.

To work out the cost base and reduced cost base: see Division 110.

100‑45  How to calculate the capital gain or loss for most CGT events

 1. Work out your capital proceeds from the CGT event.

 2. Work out the cost base for the CGT asset.

 3. Subtract the cost base from the capital proceeds.

 4. If the proceeds exceed the cost base, the difference is your capital gain.

 5. If not, work out the reduced cost base for the asset.

 6. If the reduced cost base exceeds the capital proceeds, the difference is your capital loss.

 7. If the capital proceeds are less than the cost base but more than the reduced cost base, you have neither a capital gain nor a capital loss.

Step 3—Work out your net capital gain or loss for the income year

100‑50  How to work out your net capital gain or loss

 1. Add up your capital gains for the income year. Then add up your capital losses for the income year.

 2. Subtract the total losses from the total gains.

 3. If the gains exceed the losses, then also subtract any unapplied net capital losses for previous income years. If the result is still more than zero, then this is your net capital gain.

 4. If the capital losses for the income year exceed the capital gains, the difference is your net capital loss. (You cannot deduct a net capital loss from your assessable income.)

 For the rules on working out your net capital gain or loss:
see Division 102.

100‑55  How do