Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 100 - A Guide to capital gains and losses  

Step 1 - Have you made a capital gain or a capital loss ?  

Step 2 - Work out the amount of the capital gain or loss

SECTION 100-40   What factors come into calculating a capital gain or loss ?  
Capital proceeds

100-40(1)    
For most CGT events, the capital amounts you receive (or are entitled to receive) from the event are called the capital proceeds .

To work out the capital proceeds: see Division 116 .

Cost base and reduced cost base

100-40(2)    

For most CGT events, your total costs associated with the event are worked out in 2 different ways:

• For the purpose of working out a capital gain , those costs are called the cost base of the CGT asset.

• For the purpose of working out a capital loss , those costs are called the reduced cost base of the asset.

One of the main differences is that the costs may be indexed for inflation in working out a capital gain for a CGT asset (which reduces the size of the gain), but not in working out a capital loss. Indexation is only available for certain entities and may not be available for the entire period the CGT asset is held.

To work out the cost base and reduced cost base: see Division 110 .