Section 116-20 ITAA97 provides that the capital proceeds from a CGT event are the total of:

- the money the taxpayer has received, or is entitled to receive, in respect of the CGT event, and
- the market vale of any other property the taxpayer has received, or is entitled to receive, in respect of the CGT event.

s116 – 25.  Modifications to general rule

s116 – 30 (1) & (2).   Market value substitution rule. If asset disposed of for $NIL or when capital proceeds are more or less than market value, and then parties are not dealing at arms length, the capital proceeds are deemed to be market value.

s116 – 40(1).  Apportionment rule.  If you receive a sum relating to more than 1 CGT event, just apportion capital proceeds to each CGT event and reasonably attribute to the event.
     (2) CGT event and something else, apportion on reasonable basis.

s116 – 45.  Non-receipt rule – If you do not receive they money and you took reasonable steps to get the unpaid amount, then you reduce the capital proceeds by that event. (eg settlement falls through etc).

s116 – 50.  Repaid rule.  If you receive some capital proceeds but give some of it back for whatever reason, eg compensation, capital proceeds are reduced by that amount.

s116 – 55.  Assumption of liability rule.  If you sell something and someone assumes your liability that is secured over that asset, you are treated as having received that money too.

Division 118 contains all the exemptions.

(6) Calculation of Capital gain/loss
ITAA97, Division 102

The first step in determining the CGT consequences for a taxpayer involves as already notes, indentifying the appropriate CGT event. The next step is to actually calculate the capital gain or capital loss that arises.

Section 102.5 - Assessable income includes net capital gain (tells you how to work out your capital gain)

Step1 says your assessable income includes your net capital gain i.e. capital gains during the year, reduce it by the losses during the year. 
Step 2 says apply any unapplied capital losses from prior years. 
Step 3 says you then apply the concession. 
Step 4 applies small business concession. 
Step 5 says if you have capital gains remaining, then the sum of the capital gains is your net capital gain.

Section 102.10 - How to work out your net capital loss (Says you add up capital gains less capital losses, then you have a net capital loss for the year)

(2) you cannot deduct from you assessable income a net capital loss for any income year.

Sec 102 – 15 tells you how to apply your net capital losses.

Sec 102 – 20 – You can make a capital gain or capital loss if and only if a CGT event happens. 

The calculation of capital gain or loss is spelt out individually for each CGT event in Div 104.

A taxpayer’s net capital gain for an income year is worked out according to the following five steps:
• Step 1: Any “capital gains” made during the income year are reduced by “capital losses” made during the year.
• Step 2: Any remaining capital gains are then reduced by any “net capital losses” from earlier years.
• Step 3: Any remaining capital gains which are “discount capital gains” are then reduced by the “discount percentage”.
• Step 4: Any remaining capital gains that qualify for any of the “small business concessions” are then reduced under those concessions.
• Step 5: The amount of any remaining capital gains is the taxpayer’s net capital gain for the year. (p92 CTL)
Net capital loss:  A “net capital loss” arises to the extent that the taxpayer’s capital losses for the year exceed the taxpayer’s capital gains for the year (s102-10(1)). 
(7) Exemptions

ITAA97, Division 118

Once it has been establish that there is a CGT event which applies and the quantum of th4e gain/loss from that event has been calculated, the next step is to establish whether any exceptions or exemptions apply to the capital gain/loss, Where exceptions or exemptions do apply, the capital gain or loss may be disregarded or in some circumstance may be reduced.

The CGT regime disregards certain capital gains and capital losses.  The most important exemption applies to gains and losses relating to a dwelling that is the “main residence” of a taxpayer (s118-110).   A partial exemption usually applies where the dwelling is the main residence for only part of the ownership period (s118-185) or where it also used to produce assessable income (s118-190).  Other exemptions relate to:
• cars, motor cycles and similar vehicles (s118-5)
• collectables acquired for $500 or less and personal use assets acquired for less than $10,000 (s118-10)
• assets used solely to produce exempt income or certain forms of non-assessable non-exempt income (s118-12)
• shares in PDFs (s118-13)
• depreciating assets (s118-24)
• trading stock (s118-25)
• compensation or damages for personal and occupational injuries (s118-37(1)(a), (b))
• gambling or competition winnings (s118-37(1)(c))
• expiry, surrender or forfeiture of leases not used solely or mainly for the purpose of producing assessable income (s118-40)
• specified venture capital investments in Australian entities by non-residents (Sub divs 118-F and 118-G). 
• decorations for valour unless they were purchased (the social and political cost of taxing heroes on awards or the descendants who inherit them is sensibly avoided).