1. What is Capital Loss?

Capital loss occurs when you sell a capital asset for less than its cost base. In Australia, capital losses can be used to offset capital gains in the same income year or carried forward to future years.

2. How Does the Calculator Work?

The calculator uses the capital loss formula:

Where:

• Cost Base — The total cost of acquiring and maintaining the asset
• Capital Proceeds — The amount received from selling the asset

Explanation: The formula calculates the difference between what you paid for an asset and what you received when selling it.

3. Importance of Capital Loss Calculation

Details: Accurate capital loss calculation is crucial for tax purposes in Australia. It helps reduce your taxable capital gains and can be carried forward to offset future capital gains.

4. Using the Calculator

Tips: Enter the cost base and capital proceeds in Australian dollars. Both values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is included in the cost base?
A: The cost base typically includes purchase price, acquisition costs, improvement costs, and certain ownership costs.

Q2: How long can capital losses be carried forward?
A: In Australia, capital losses can be carried forward indefinitely until they are used to offset capital gains.

Q3: Can capital losses offset ordinary income?
A: No, capital losses can only be used to offset capital gains, not other types of income.

Q4: Are there time limits for claiming capital losses?
A: Capital losses must be claimed in the year they are incurred and can be carried forward to future years.

Q5: What types of assets qualify for capital loss calculation?
A: Most capital assets including real estate, shares, and other investments qualify for capital loss calculation.