The cost base is what you use to calculate your capital gain or loss. It is broadly what the asset cost you — the purchase price plus eligible associated costs. Getting the cost base right is essential: a higher cost base reduces your taxable capital gain.
The Five Elements of the Cost Base
The ATO defines the cost base across five elements:
| Element | What It Covers |
|---|---|
| 1. Money paid or property given | Purchase price of the asset |
| 2. Incidental acquisition costs | Stamp duty, legal fees, conveyancing, broker commissions, title transfer fees |
| 3. Non-capital ownership costs | Costs of owning the asset that were not tax-deductible (e.g., maintenance on a non-income-producing asset) |
| 4. Capital improvements | Capital works, improvements, and additions — not repairs or maintenance |
| 5. Incidental disposal costs | Agent commissions, legal fees, advertising costs on sale |
What Can You Include in the Cost Base?
Shares and ETFs
For ASX shares or ETFs, the cost base typically includes:
- Purchase price (price per share × number of shares)
- Brokerage commission on purchase
- Brokerage commission on sale (element 5)
You cannot include costs you have already claimed as a tax deduction, such as investment interest or margin loan costs.
Investment Property
For an investment property, the cost base may include:
- Purchase price
- Stamp duty and conveyancing fees
- Legal fees (purchase and sale)
- Building and pest inspection fees
- Capital improvements (kitchen renovation, adding a room, new flooring)
- Agent commission on sale
- Advertising costs on sale
You cannot include:
- Repairs and maintenance (these are deductible in the year incurred)
- Depreciation that you have already claimed as a deduction
- Interest on the mortgage (deductible as a rental expense)
Cryptocurrency
For crypto assets, the cost base includes:
- The AUD value of the crypto at the time of acquisition
- Exchange fees and gas fees paid at acquisition
- Exchange fees paid at disposal (element 5)
You must value each transaction in AUD at the time it occurred, using a reputable exchange rate source.
Reduced Cost Base
The reduced cost base is a separate concept used to calculate a capital loss (not a capital gain). The main difference is that element 3 (non-capital ownership costs) is excluded from the reduced cost base. This means that when calculating a capital loss, the cost base is slightly smaller.
Cost Base and Tax Deductions — The Key Rule
Any amount you have previously claimed as a tax deduction cannot be included in the cost base. This prevents a double benefit. For example:
- Capital works deductions on a rental property reduce your cost base dollar-for-dollar
- Depreciation claimed on assets reduces the cost base of those assets
- Borrowing costs claimed as a rental deduction cannot be added to the cost base
Record-Keeping for Cost Base
You must keep records that support every element of your cost base — receipts, contracts, bank statements, and brokerage confirmations. Records should be kept for 5 years after you dispose of the asset (or from when you lodge your return for that income year, if later).
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Frequently Asked Questions
Can I include stamp duty in my cost base? Yes. Stamp duty paid on the purchase of an asset is an incidental acquisition cost (element 2) and forms part of the cost base.
Can I include mortgage interest in the cost base of an investment property? No. Mortgage interest is claimed as a rental deduction in the year it is incurred. You cannot also include it in the cost base.
What if I don’t have records of what I paid for an old asset? The ATO may allow a market value substitution in some cases, but you must be able to substantiate your cost base. Without records, you risk having the ATO assess the cost base as nil. Good record-keeping is essential.
This article provides general tax information for FY2025–26. For advice tailored to your situation, speak with a registered tax agent or accountant. Find one through the Tax Practitioners Board register.