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  • Elements of the cost base
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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    The cost base of a CGT asset is made up of five elements. You need to add together all these elements to work out your cost base for each CGT asset.

    If you are registered for GST, the elements of the cost base are reduced by the amount of any GST input tax credits included in the cost.

    First element: money paid for the asset

    This element includes money paid (or required to be paid) for the asset and the market value of property given (or required to be given) to acquire the asset.

    Second element: incidental costs of the CGT event or of acquiring the CGT asset

    Examples of these incidental costs include agents commission, the cost of advertising to find a seller or buyer, stamp duty and fees paid for professional services (for example, to an accountant, professional tax adviser, valuer or lawyer).

    You can include expenditure for advice concerning the operation of the tax law as an incidental cost only if it was provided by a recognised professional tax adviser and you incurred the expenditure after 30 June 1989.

    Do not include expenditure for which you have or may have a deduction for income tax purposes in any year.

    Third element: non-capital costs associated with owning the asset

    Examples of these non-capital costs include rates, land taxes, repairs and insurance premiums. They also include non-deductible interest on borrowings to finance a loan used to acquire a CGT asset and on loans used to finance capital expenditure you incur to increase an asset's value.

    You can include non-capital costs of ownership only in the cost base of assets acquired on or after 21 August 1991. You cannot include these non-capital costs in the cost base of any collectables or personal use assets.

    These costs cannot be indexed or used to work out a capital loss. Do not include expenditure for which you have or may have a deduction for income tax purposes in any year.

    Fourth element: capital costs associated with increasing the value of your asset

    This element is relevant only if the expenditure was incurred to increase the asset's value and is reflected in the state or nature of the asset at the time of the CGT event-for example, if you paid for a car port to be built on your rental investment property.

    Fifth element: capital costs to preserve or defend your title or rights to your asset

    This element includes capital expenditure you incur to preserve or defend your title or rights to the asset - for example, if you paid a call on shares.

    Last modified: 25 Feb 2020QC 27448