Adjusted Cost Base for Australian Shares
Your adjusted cost base is the cost base of a share or ETF holding after it has been adjusted up or down for events since you bought it. The cost base starts as what you paid plus buying and selling costs (the ATO’s five elements, including brokerage and stamp duty). It is then reduced by things like returns of capital, tax-deferred distributions and AMIT downward adjustments, and increased by AMIT upward adjustments and certain capital costs.
Your adjusted cost base is the number CGT is worked out from: capital gain = sale proceeds − adjusted cost base. Getting it right matters, because an out-of-date cost base overstates or understates your gain. This is general information, not tax advice; see the ATO on the cost base of assets.
Last reviewed: 23 July 2026.
What is an adjusted cost base?
Your cost base is what a CGT asset costs you for tax purposes. The adjusted cost base is that figure after it has been changed by events during your ownership — capital returns, certain distributions, corporate actions and (in some cases) indexation. When you eventually sell, your capital gain or loss = capital proceeds − adjusted cost base, so an accurate adjusted cost base is what makes your CGT figure correct.
The five elements of a cost base
The ATO builds a cost base from five elements, added together:
- What you paid — money paid, or property given, for the asset.
- Incidental costs — brokerage, stamp duty and similar costs of acquiring or selling.
- Costs of owning — e.g. interest and holding costs (only for assets acquired after 20 August 1991, and not where already claimed as a deduction).
- Capital costs to increase or preserve value — capital improvements.
- Capital costs of preserving or defending your title or rights to the asset.
For most ASX share and ETF investors, elements 1 and 2 (purchase price plus brokerage) do the heavy lifting. For example, you buy 1,000 ETF units at $30.00 = $30,000, plus $20 brokerage, giving a cost base of $30,020.
How capital returns and AMIT distributions reduce your cost base
Some cash you receive from a holding is not ordinary income — it is a return of capital or a tax-deferred amount. Because you were not taxed on it as income, the ATO instead reduces your cost base by that amount, so the deferred gain is captured later when you sell.
For ETFs and managed funds in the AMIT regime, this appears as a cost base decrease on your AMMA statement (see our AMIT statements guide). Conversely, where the fund attributes more taxable income than the cash it paid you, your cost base is increased, so you are not taxed twice on the same amount.
Continuing the example above, your cost base is $30,020. Your AMMA statement for the year reports an AMIT cost base net decrease of $250 (the fund distributed more cash than the taxable income it attributed — for example, tax-deferred components). Apply the reported net amount once: cost base = $30,020 − $250 = $29,770. If you later sell for $33,000, your capital gain is $33,000 − $29,770 = $3,230 — not the $2,980 you would get from the un-adjusted $30,020.
Do not double-count. The AMIT cost base net amount on your AMMA statement already bundles the tax-deferred and return-of-capital components for that holding — apply the single reported net amount, not the net amount plus the individual tax-deferred lines. A return of capital on a directly held company share, which has no AMMA statement, is applied separately as its own cost-base reduction. Cited to the ATO on cost-base adjustments for AMIT members.
How cost-base indexation works
Indexation adjusts a cost base upward for inflation, reducing the taxable gain. Two things to keep separate:
- The frozen indexation method (current rules). Indexation is available only for assets acquired before 21 September 1999, and even then it is frozen at the 30 September 1999 CPI. For anything bought since, indexation does not apply under the current rules — you use the 50% discount method instead (if eligible).
- The 2027 reform reintroduces CPI indexation. From 1 July 2027, gains accruing after that date are broadly CPI-indexed and taxed at a 30% minimum, while gains accruing before it keep the 50% discount — the deemed-disposal transition draws the line between the two (eligibility conditions, holding-period rules and exclusions apply). This is law, not a proposal. For the full mechanics, see our guide to the 2027 CGT changes.
Always check current indexation factors and thresholds with the ATO indexation method page rather than relying on figures quoted elsewhere.
Cost base vs reduced cost base (for capital losses)
There are actually two figures. You use the cost base to work out a capital gain, and the reduced cost base to work out a capital loss. The reduced cost base excludes the third element (costs of owning) and can differ where amounts have been recouped. If a sale produces a loss, check the reduced cost base — not the ordinary cost base.
How Crowdfolio tracks your adjusted cost base
Crowdfolio maintains a per-parcel adjusted cost base for each holding: it records your purchase price and brokerage, then applies capital returns, tax-deferred amounts and AMIT cost-base adjustments (from uploaded AMMA statements) and corporate actions such as demergers, so the cost base stays current for CGT. When you model a sale, the CGT calculator uses the adjusted figure. Always reconcile against your own statements and the ATO.
Frequently asked questions
What is an adjusted cost base?
It is your holding’s cost base after adjustments for events since purchase — capital returns, tax-deferred and AMIT distributions, indexation and corporate actions. Your capital gain when you sell is sale proceeds minus the adjusted cost base, so keeping it current keeps your CGT figure correct.
What is included in the cost base of shares?
The ATO’s five elements: what you paid; incidental costs like brokerage and stamp duty; certain costs of owning; capital costs to improve or preserve value; and capital costs to defend your title. For most ASX investors the purchase price plus brokerage are the main components.
What reduces the cost base of an ETF or managed fund?
Returns of capital, tax-deferred distribution components, and AMIT downward (cost base decrease) adjustments reported on your AMMA statement. Because you were not taxed on these as income, the ATO reduces your cost base instead, so the gain is captured when you sell.
Does cost-base indexation still apply?
Under current rules, only for assets acquired before 21 September 1999, frozen at the 30 September 1999 CPI. Separately, the 2027 CGT reform reintroduces CPI indexation for growth accruing from 1 July 2027 (taxed at a 30% minimum), with the pre-2027 slice keeping the 50% discount.
Is there an adjusted cost base calculator?
Crowdfolio tracks a per-parcel adjusted cost base automatically from your trades, brokerage, capital returns and uploaded AMIT statements, then feeds it into the CGT calculator when you model a sale. This is an estimate — reconcile against your own statements and the ATO.
This help article is general, factual information for Australian resident investors and provides a description only. It is not financial or tax advice and does not account for your circumstances. Cost-base rules are detailed and asset-specific — verify against your own statements and the ATO, or consult a registered tax agent, before lodging.
Related: our capital gains tax calculator models a sale on your adjusted cost base, our AMIT statements guide explains the cost-base net amount, and tax-lot tracking keeps each parcel’s cost base current.
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