CGT - inflation?

[Tigger]

Just a quick one.

If I sell, does inflation get factored into the CGT calculation? My new accountant says if I bought for (approx) $130,000 and sell for (approx) $230,000, then CGT is calculated based around the (approx) $100,000 capital growth.

However I thought there is to be an allowance for inflation over the intervening 9 years. Yes or no?

 

[bluestorm]

No, inflation is not factored in for CGT calculation.

 

[battler]

There's a 50% discount after the first 12 months though.

 

[wobbycarly]

For a while, you could do either; 50% discount or indexed method. But as you can no longer index after 30/09/1999, the 50% discount is usually going to make more sense.

Capital gain discount

If a CGT event occurs after 11.45am EST 21 September 1999, and the asset has been held for at least 12 months, the taxpayer has a further choice in calculating a capital gain:

• calculating the capital gain using a cost base which has been indexed (but not beyond 30 September 1999) – see cost base below -- or
• calculating the capital gain without indexation, and then reducing the gain by the relevant CGT discount rate (50% for an individual or trust; one-third for a complying superannuation entity; nil for other entities such as a company)

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