Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

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

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Division 114 - Indexation of cost base

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SECTION 114-1 Indexing elements of cost base

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114-1(1)
In working out the * cost base of a * CGT asset under subsection 110-36(1A) , index expenditure incurred in each element (except the third element).

Note 1:

The expenditure can include giving property (see section 103-5 ).

Note 2:

Subdivision 960-M shows you how to index amounts (see subsections 960-275(1B) and (1C) in particular).

Note 3:

You have to work out the cost base of a CGT asset if a CGT event happens in relation to it or if there is a cost base modification.

Note 4:

You cannot index expenditure in the third element (costs of ownership) (see subsection 960-275(4) ).

114-1(2)
In working out the * cost base of a * CGT asset under subsection 110-36(1) , index expenditure incurred in each element (except the third element) at or before the time mentioned in paragraph 110-36(1)(a) .

Note 1:

The expenditure can include giving property (see section 103-5 ).

Note 2:

Subdivision 960-M shows you how to index amounts. Indexation under subsection 110-36(1) does not take account of inflation after 30 September 1999 (see subsections 960-275(2) and (3) ).

Note 3:

You have to work out the cost base of a CGT asset if a CGT event happens in relation to it or if there is a cost base modification.

Note 4:

You cannot index expenditure in the third element (costs of ownership) (see subsection 960-275(4) ).

Note 5:

Indexation under subsection 110-36(1) is not relevant to expenditure incurred after 11.45 am on 21 September 1999 or any expenditure relating to a CGT asset acquired after that time.

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History

S 114-1 substituted by No 49 of 2026, s 3 and Sch 1 item 14, effective 1 July 2026. S 114-1 formerly read:

SECTION 114-1 Indexing elements of cost base
114-1
In working out the * cost base of a * CGT asset * acquired at or before 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999, index expenditure incurred at or before that time in each element. (The expenditure can include giving property: see section 103-5).
Note 1:

Subdivision 960-M shows you how to index amounts. The indexation does not take account of inflation after 30 September 1999.

Note 2:

You have to work out the cost base of a CGT asset if a CGT event happens in relation to it or if there is a cost base modification.

Note 3:

You cannot index expenditure in the third element (costs of ownership): see subsection 960-275(4).

Note 4:

Indexation is not relevant to expenditure incurred after 11.45 am on 21 September 1999 or any expenditure relating to a CGT asset acquired after that time.

Example:

Peter purchases a building as an investment on 1 January 1994 for $ 250,000. This amount forms the first element of his cost base.

He sold the building on 1 February 1996.

The index number for the quarter in which he sold the building (the March quarter 1996) is 119.0. The index number for the quarter in which he purchased the building (the March quarter 1994) is 110.4.

Applying section 960-275 , work out the indexation factor as follows:

119.0
110.4 = 1.078

The indexed first element of Peter ' s cost base is:

$ 250,000 × 1.078 = $ 269,500

S 114-1 amended by No 32 of 2006, s 3 and Sch 2 item 46, by substituting " costs of ownership " for " non-capital costs of ownership " in note 3, applicable to CGT events happening on or after 1 July 2005.

S 114-1 amended by No 169 of 1999 and inserted by No 46 of 1998.

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