Tax Law – Cost Base(Part 3) – Reduced cost base
This article is part 3 of our three-article series on CGT Cost Base. You can find parts 1 and 2 by clicking on the following links:
A capital gain exists where the capital proceeds attributable to a capital event exceed the cost base of the relevant CGT asset. However, a capital loss exists where the capital proceeds are exceeded by the reduced cost base of the asset.
Purpose of reduced cost base
Elements of a reduced cost base
- first element: the amount of money paid or assets given by the taxpayer to acquire the asset;
- second element: incidental costs for the acquisition of the CGT asset;
- third element: any amount assessable due to a balancing adjustment event, or which would have been assessable had balancing adjustment relief not been available;
- fourth element: costs related to the improvement or preservation of the CGT asset; and
- fifth element: costs related to the preservation or defending of rights or titles of the CGT asset.
If you have concerns about calculating a CGT asset’s reduced cost base, call LAC Lawyers and we can provide advice and assistance.