# How to calculate capital gain/loss for tax return?



## b.j. (17 October 2009)

I apologise in advance if this question sounds way too dumb. To be honest this is the first tax return I've done that involves capital gain. 

To simplify, assuming the share transactions I've had during the year are as below:

Bought $1000 worth of share A and later sold for $2000
Bought $1000 worth of share B and didnt sell them

so,
Is my capital gain a).$2000-$1000=$1000(share A)? or b). $1000(profit from A)-$1000 worth of share B=0???

Your help would be greatly appreciated!!!!


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## white_crane (17 October 2009)

*Re: how to calculate capital gain/loss for tax return*

Have you checked the ATO website?
Have you searched for other threads asking the same?

Basically,
capital gain = total realised profit - total costs of making that profit

Profit/loss on share B is unrealised and doesn't come into calculations until sold.

It also depends on whether you are a trader or an investor and how long you have held the shares.


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## rock86 (17 October 2009)

*Re: how to calculate capital gain/loss for tax return*



b.j. said:


> I apologise in advance if this question sounds way too dumb. To be honest this is the first tax return I've done that involves capital gain.
> 
> To simplify, assuming the share transactions I've had during the year are as below:
> 
> ...




The only capital gain is on share A, you haven't sold share B therefore you have made no gain/loss and is not reportable until they are sold. The capital gain for an investor is calculated by the proceeds from sale minus cost base of the share (purchase price- including brokerage fees etc.)

If you held them for over a year you receive a 50% discount, so therefore the net capital gain (if held over a year) reportable for share A would be $500


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## b.j. (17 October 2009)

*Re: how to calculate capital gain/loss for tax return*

rock86,

Thank you so much for your explanation!


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## matan100 (20 October 2009)

Hi newbie question here. How can I account for different costs when I do CGT returns?

For instance if I buy 100 shares at $1 and 100 shares at $1.50 later on, my average cost is  $1.25. If I sell shares, can I use $1.25 when calculating capital gain or do I have to use a FIFO or LIFO system?

Thanks


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## Krusty the Klown (20 October 2009)

matan100 said:


> Hi newbie question here. How can I account for different costs when I do CGT returns?
> 
> For instance if I buy 100 shares at $1 and 100 shares at $1.50 later on, my average cost is  $1.25. If I sell shares, can I use $1.25 when calculating capital gain or do I have to use a FIFO or LIFO system?
> 
> Thanks




You can use any one of those three methods, as long as you use that method only for all transactions of that stock in that tax year.


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## rock86 (20 October 2009)

What krusty said, but obviously chose the method which will produce the lowest net gain. Minimise that tax


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