The indexation method of calculating your capital gain

Who can use this method?

You can use the indexation method to calculate your capital gain if:

• a capital gains tax (CGT) event happens to an asset you acquired before 11.45am (by legal time in the ACT) on 21 September 1999, and
   
• you owned the asset for 12 months or more.

If you are not a company, you meet the two conditions above and you want to use the indexation method, you must choose to do so, otherwise the discount method will apply.

If you are a company (other than a listed investment company) and the capital gain meets the above conditions, you must use the indexation method to calculate the capital gain.

Specific rules affect certain assets of a life insurance company.

There are some exceptions to the requirement that you must have owned an asset for at least 12 months for indexation to apply. For example, you can use the indexation method:

• if you acquire a CGT asset as a legal personal representative or a beneficiary of a deceased estate. The 12-month requirement is satisfied if the deceased acquired the asset 12 months or more before you disposed of it, or
   
• if you acquired an asset as the result of a marriage or relationship breakdown. You will satisfy the 12-month requirement if the combined period your spouse and you owned the asset is more than 12 months.