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Offsetting Capital Loss with Capital Gains

Discussion in 'Accounting & Tax' started by SouthBoy, 13th May, 2016.

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  1. SouthBoy

    SouthBoy Well-Known Member

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    If I carried a capital loss of say $50,000 from previous years, and in the current financial year sold a parcel of shares held for 18 months and made a profit of say $22,000, would the Capital loss carried forward be $28,000 or $39,000?

    The reason for the question is if I didn't have the Capital loss from previous years, and had made this profit, I would only have to pay CGT on 50% of the profit, that is $11,000. This is because I had held the parcel of shares for over 12 months. So shouldn't I be carrying forward a capital loss of $39,000?

    Will I be taxed differently if the $22k profit was made from a property held for 18 months?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    - $50k + $22k = -$28k
     
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  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The CGT formula applies current year losses and prior year losses before discounting occurs. This allows both discount and non-discount CGT gains to exist. Taxpayers may choose to reduce non-discount before discount.
     
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  4. SouthBoy

    SouthBoy Well-Known Member

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    Thanks, so to clarify my understanding here. If in the current year I had sold another parcel of shares held for say 6 months and made a profit of say 40k, how much cash will be up for CGT?

    would it be -$50k+ $40k+ $22k= $12k ---->$6k (as $22k has the CGT discount)
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    yes
     
  6. SouthBoy

    SouthBoy Well-Known Member

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    Thanks @Terry_w