Costbase & 5 Elements

<p >The cost base of a 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 or not you have made a capital gain. If you may have made a capital loss, you need the reduced cost base of the CGT asset for your calculation. The columns labelled ‘Capital gain’ and ‘Capital loss’ in the tables at <a title=" appendix&nbsp;1" class="bookmark" href="https://www.ato.gov.au/print-publications/guide-to-capital-gains-tax-2012-13/?anchor=Appendix_1_Summary_of_CGT_events#Appendix_1_Summary_of_CGT_events" >appendix 1</a> indicate whether the cost base and reduced cost base of an asset are relevant for a CGT event.

If they are not relevant, the same columns in the tables explain how to work out your capital gain or loss. For example, if you enter into an agreement not to work in a particular industry for a set period of time, <a class="bookmark" href="https://www.ato.gov.au/print-publications/guide-to-capital-gains-tax-2012-13/?anchor=D1#D1" >CGT event D1</a> specifies that you calculate your capital gain or capital loss by comparing the capital proceeds with the incidental costs.

Cost base is not relevant when working out a capital gain from a depreciating asset.</p>

<h5 ><a class="anchor" id="Elements_of_the_cost_base" >Elements of the cost base</a></h5>

<p >The cost base of a CGT asset is made up of five elements:</p>

<ol >

<li >money or property given for the asset</li>

<li >incidental costs of acquiring the CGT asset or that relate to the CGT event</li>

<li >costs of owning the asset</li>

<li >capital costs to increase or preserve the value of your asset or to install or move it</li>

<li >capital costs of preserving or defending your ownership of or rights to your asset.</li>

</ol>

Costbase & 5 Elements

Attachments