Hi there, In process of putting formula in spreadsheet that displays tax liability, CG payable with possible selling of shares based on their profit/loss and acquired date. I am getting confused with how should i apply the logic of 50% CGT disount (assuming more than 12 months held) and no CGT discount. I understand the capital gain position will be summed up at EOFY including any capital loss. How does that get calulated assuming some of the shares were held for more 12 months and some were not... 1) ABC shares were held for >12 months, after sale profit made was $500, xyz shares were held for 6 months and sold at loss of $300. does that mean capital gain would be 500-300 = 200, as ABC held for >12 months so CGT payable only on $100... 2) Above example in reverse, ABC was sold at loss of $200, >12 month of owenship but XYZ sold at profit of $500, 6 months of onership. does that mean CGT payable on 500-200 = 300 & 50% discount can't apply cause XYZ was held for 6 months..... Above is very simple scenarios involving 2 transactions, trying to understand how can i calulcate this when there are multiple transactions.. cheers

Thanks Terry. That i understand given all the shares sold were held for >12 months.... However in some scenarios, part of shares sold could be held for <12 months (i.e. not eligible for 50% discount)....what happens then.

You're examples are correct. You can only apply the discount if the shares which had a capital gain were held for > 12 months. How long you held the shares which had a capital loss is irrelevant.

Then you need to break them into separate groups and apportion the cost base across the proceeds. Say you have $100 of X, of which half has been held for >12 months and half hasn't then you sell the lot for $200, you'd split them into the two original cost groups and half would be eligible for the discount and half would not. It can get messy very quickly, especially where there are many buys representing the cost base and even multiple sells for the proceeds that all vary.

Thanks Daniel. where i'm facing difficulty is when there are more than 2 transactions per year....e.g. I could do 20 transaction in a year, some of them are loss/profit, plus combination of 50%/NIL CGT discount...

ok, so basically create two groups, one eligible for 50% CGT & other not eligible. should i also allocate proifit/loss based on these groups...e.g. 1) group 1, 50% CGT discount: Assume 10 sell transactions, net profit/loss = $500, hence tax payable on $250.....If net profit/loss = -$100, then tax losses carried forward.... 2) group 2, nil CGT discount: Assume 10 transactions, net profit/loss = $400, hence tax payable on $400.....If net/profit = -$100, then tax losses carried forward.... Or group1 & group2 has to be added to find the net proft/loss amount and then apply applicable CGT discount. If yes then what CGT discount can be applied given as all 20 transactions completed, some of them were not eligible for 50% discount....

Current year looses, prior year losses, current year non-discount gains, CY discount gains all should be included. Then also allow for deferred tax and cost base adjustments. Then there is the cost method - FIFO is normal but if a specific parcel is capable of use and it works then that may be prudent too. The taxpayer can choose the application of losses...Against discount or non-discount. (Why would you I ask ?) But if it exceeds the gains it carries frwd. All the above are the typical errors I see when I get a DIY calculation. 8/10 times its wrong. Brokerage is a part of the CGT cost or net sale proceeds...Thats another one I see wrong. Its not a separate deduction etc despite Commsecs best efforts each year to infer that to its millions of clients.

ATO make it easier https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/CGT-gain-or-loss-worksheet-2016.pdf

You need 3 groups: CGT gain eligible for discount CGT gain not eligible for discount CGT loss First step is to apply the losses against the gains not eligible for the discount (you have a choice of how to apply losses and applying them this way is to your benefit). Any residual losses are then applied against gains which are eligible for the discount. Finally, apply the 50% discount to the remaining eligible gains and then add all the remaining gains together (i.e. those that have been discounted and those which are not eligible for the discount and which were not wiped out by the losses).

Excellent . Thanks Daniel. Applying losses comes first and then eligible discount. Now gota figure out a way to put this in excel formula

Cheers Paul. I've read above & most of that gone top of my head. I'll read again but seems Daniel's explanation should be enough for me to build logic in excel. Before I make sell decision on shares we own, just need to know at that time what the tax position is hence giving true profit/loss situation.....do you follow similar logic when doing returns or your super software has all that logic built in...

That's correct Terry however I'm trying to add those calculations as we go along throughout the year in a way that it calculates my final tax liability, before I sell at that time. I get that calculation will change after each transaction (subject to loss/profit, 50% discount/no discount). Nonetheless it should give me accurate information before i make that sell transaction....

If you get frustrated with excel you could try Sharesight™ Share Portfolio Management Software. It has a CGT report: Capital Gains Tax Report — Sharesight Help. I find it saves me heaps of time with managing my portfolio.

I have software and I still need to think it through to maximise the tax outcomes. Trusts and property etc and residency issues etc can make it far far complex. Then throw in small business concessions......