Income Tax Assessment Act 1997



Division 114 - Indexation of cost base  

SECTION 114-10   Requirement for 12 months ownership  


You only index expenditure in the *cost base of a *CGT asset for a *CGT event happening in relation to the asset if you, or the entity whose cost base is being worked out, had *acquired the asset at or before 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999 and at least 12 months before the time of that *CGT event.

Generally, expenditure is indexed from when it is incurred: see subsection 960-275(2) . The exception is when there is an acquisition that did not result from a CGT event. The first element in this case is indexed from when the expenditure was paid: see subsection 960-275(3) .

There are 5 exceptions:

  • one for *CGT event E8: see subsection (3); and
  • one for roll-overs: see subsections (4) and (5); and
  • one for deceased estates: see subsection (6); and
  • one for a surviving joint tenant: see subsection (7); and
  • one for *CGT event J1: see subsection (8).
  • CGT event E8

    For *CGT event E8, the beneficiary indexes the *cost bases of the *CGT assets of the trust only if the beneficiary *acquired the *CGT asset that is the interest in the trust capital at least 12 months before *disposing of it.

    It does not matter (for indexation from the beneficiary ' s point of view) how long the trustee owned any of the assets of the trust.

    Same asset roll-overs

    The 12 month rule is satisfied for both the entity that owned a *CGT asset before a *same-asset roll-over and the entity that owned it after the roll-over if the sum of their periods of ownership of the asset (and the sum of the periods of ownership of the asset of other entities involved in an unbroken series of roll-overs) is at least 12 months. Replacement asset roll-overs


    The 12 month rule is satisfied for an entity obtaining a *replacement-asset roll-over for a *CGT event happening in relation to a *CGT asset if the period of the entity ' s ownership of the original asset (and of other assets for an unbroken series of replacement-asset roll-overs) and of the replacement asset are together at least 12 months.

    Company A transfers a CGT asset to Company B (which is a member of the same wholly-owned group and a foreign resident) 5 months after acquiring it. There is a roll-over for the transfer under Subdivision 126-B .

    Company B sells the asset 8 months after the transfer.

    Company A indexes expenditure in its cost base up to the transfer. That cost base becomes the first element of Company B ' s cost base. Company B indexes its cost base from the transfer to the sale.

    Deceased estates

    If a *CGT asset you owned just before dying devolves to your *legal personal representative or *passes to a beneficiary in your estate, the 12 month rule applies to the legal personal representative or the beneficiary as if that entity had *acquired the asset when you acquired it. Surviving joint tenant

    If individuals own a *CGT asset as joint tenants and one of them dies, the 12 month rule applies to the surviving joint tenant as if the surviving joint tenant had *acquired the deceased ' s interest in the asset when the deceased acquired it.


    The surviving joint tenant is taken to have acquired the deceased ' s interest in the asset: see section 128-50 .

    CGT event J1

    If *CGT event J1 happens, the company that owns the roll-over asset ignores (for indexation purposes) the acquisition rule in subsection 104-175(8) .


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