# a) This question is about calculating the net capital gain or loss for the income year.

According to sec100-50
ITAA9! the calculation of the net capita) pin or "oss applies fi#e steps! and the order is important. \$1) %educe
the capital pins for the income year in order! by the capital losses for the income year. \$&) %educe any remaining
capital gains in order! by any unapplied net capital losses for pre#ious income years. \$') %educe any
remaining discount capital gains by the discount percentage. \$() If carrying on a small business! apply the small
business concession in further reduction of the capital gains. \$5) Add up any remaining capital gains that are
not discount capital gains and any remaining discount capital gains.
In this case! only t)o steps applied! )hich are calculating current year capital gains and reducing unapplied net
capital losses for a pre#ious year. *irst! current year capital gains equal to capital proceeds minus cost base.
About capital +roceeds! it equals to the selling price! )hich is ,&.'-million.As regards cost base! because the
factory is acquired after year 1999 \$.i# 11()! so the cost base consists of fi#e elements! )hich are \$1)
purchase price / \$&) incidental costs/ \$') the costs of o)ning the 01T asset you incurred! if the asset is acquired
after &0 August 1991! \$() capital e2penditure/ \$5) capital e2penditure incurred to establish! preser#e or defend
the title to the asset! or a right o#er the asset \$secll0-&5). In relation to the question! the purchase price!
legal fees and agent3s fees should be added. Thus! ,00!0004,1&!0004,50!0005,6&!000. -o! current year capital
gains are ,1!577!000. -econd! until '0 "une &01'! +arty Time had carry-for)ard capital losses of 60!000 dollars.
As a result! for the year ended '0 "une &01(! the net capital gain of +arty Time is 1!5&7!000 dollars! )hich is
0alculating from ,1!577!000-,60!000.