• What is the cost base?

    Introduction

    The cost base of a capital gains tax (CGT) asset is generally the cost of the asset when you bought it. However, it also includes certain other costs associated with acquiring, holding and disposing of the asset.

    For most CGT events, you need the cost base of the CGT asset to work out whether you have made a capital gain. If you have made a capital loss from these events, the reduced cost base of the CGT asset is relevant for your calculation.

    For those CGT events where the cost base and reduced cost base are not relevant, the CGT event explains the amounts to use to work out your capital gain or capital loss. Columns 3 and 4 in the Summary of capital gains tax events indicate when the cost base or reduced cost base of an asset is relevant in working out your capital gain or capital loss. For example, if you enter into an agreement not to work in a particular industry for a set period of time, CGT event D1 specifies that you calculate your capital gain or capital loss by comparing the capital proceeds with the incidental costs – see Second element: incidental costs of acquiring the CGT asset or of the CGT event. Also the cost base of an asset that is a depreciating asset is not relevant in working out a capital gain from that asset.

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      Last modified: 21 Jun 2016QC 17161