CGT Loss

[Dos]

Hi guru's,

This may seem strange as it wouldn't have happened to a lot of people recently BUT is a capital loss taken off one's taxable income at tax time? My in-laws have recently sold a unit in which they lost $10k on. So does it work on the same theory as CGT but opposite or is it bad luck if you have made a loss? If they lost $10k, is it also halved as CGT would be and therefore $2.5k each comes off there taxable income.

Cheers for any advice you can add!

Dos

 

[geoffw]

My understanding is that capital losses can only be offset against capital gains. If you don't have enough cap gains to offset, the losses can be carried forward- the losses cannot be used to offset income.

 

[DaleGG]

Hi Dos

No, I am afraid that geoffw is correct in that the Capital Loss is carried forward until such time as it can be offset against a Capital Gain. The Loss is not halved though.

Pity!

Dale

Hi guru's,

This may seem strange as it wouldn't have happened to a lot of people recently BUT is a capital loss taken off one's taxable income at tax time? My in-laws have recently sold a unit in which they lost $10k on. So does it work on the same theory as CGT but opposite or is it bad luck if you have made a loss? If they lost $10k, is it also halved as CGT would be and therefore $2.5k each comes off there taxable income.

Cheers for any advice you can add!

Dos

 

[quiggles]

Dale,

I think Dos might get confused by your reply when you say the loss is not halved.

Let's assume capital loss of $10k.
Later a capital gain of $20k.

Net capital gain $10k, apply the discount and pay tax on $5k of capital gain.

NOT

Capital loss of $10k
Capital gain of $20k

Apply the 50% discount, taxable capital gain $10k less capital loss of $10k leaves no tax payable.

EFFECTIVELY, the same discount applies to each.

 

[DaleGG]

G'day

OK, fair point. The Capital Loss is not halved in the year it is incurred.

However a future CG would see the full loss off set against the loan before discounting it.

Dale

Dale,

I think Dos might get confused by your reply when you say the loss is not halved.

Let's assume capital loss of $10k.
Later a capital gain of $20k.

Net capital gain $10k, apply the discount and pay tax on $5k of capital gain.

NOT

Capital loss of $10k
Capital gain of $20k

Apply the 50% discount, taxable capital gain $10k less capital loss of $10k leaves no tax payable.

EFFECTIVELY, the same discount applies to each.

 

[Dos]

Hi guys,

Thanks for the info, much appreciated as always. They will have a capital gain in the same year as well. So my understanding is that the equation looks something like:

Gain - Loss = X. Tax payable (Y) is then half of X. Then again Y gets divided by 2 for each person. In practice - 20k - 8k = 12k. Apply discount = 6k and each is then up for 3k at tax time?

Thanks again!!

Dos

 

[DaleGG]

Hi Dos

Yes, you have it right.

Dale

Hi guys,

Thanks for the info, much appreciated as always. They will have a capital gain in the same year as well. So my understanding is that the equation looks something like:

Gain - Loss = X. Tax payable (Y) is then half of X. Then again Y gets divided by 2 for each person. In practice - 20k - 8k = 12k. Apply discount = 6k and each is then up for 3k at tax time?

Thanks again!!

Dos